Hong Kong’s dry spell for new stock offerings set to end with big China IPO deals
- The pick up speaks of an improving environment for valuations as virus-related curbs are eased and Beijing dials back on corporate crackdown
- Tianqi Lithium’s potential US$1.7 billion listing paves the way for July to be the strongest month for IPOs in Hong Kong this year
After a dismal first six months, things are finally looking up for initial public offerings (IPOs) in Hong Kong as several large Chinese firms line up to list in Asia’s financial hub in the second half.
Along with several other mid- to large-sized deals in the pipeline, they are poised to revive a dormant market where firms raised a paltry US$2.6 billion between January and June. That is a 92 per cent slump from last year and the lowest sum for the same period since 2009.
The pick up in upcoming listings speaks of an improving environment for valuations as the easing of virus-related curbs and Beijing’s dialling back on a corporate crackdown spur a world-beating rally in stocks in China and Hong Kong. Better clarity on rules for Chinese share offerings abroad could also “encourage more new listings” in Hong Kong, Charles Zhou, an analyst at Credit Suisse wrote in a note last month.
The flow of positive news from China has propelled the benchmark CSI 300 Index toward a technical bull market and analysts are expecting more constructive policy reinforcements in the second half of the year.
“If it happens, that would hopefully help to push through some of our pipeline of equity deals that are waiting for a better market window to open,” said Selina Cheung, co-head of Asia equity capital markets at UBS Hong Kong.
