Hong Kong may get a leg up in hosting IPOs in 2023, as China’s post-Covid reopening boosts sentiment for companies raising funds

Xiamen International Bank may raise about HK$10 billion (US$1.3 billion), while Ruqi Mobility could also be in the market

China’s onshore market meanwhile saw a record year for IPO proceeds at US$93.5 billion in 2022

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An employee on an assembly line that produces speakers at a factory in Fuyang city, in China’s eastern Anhui province, on November 30, 2022. Photo: AFP.

Published: 5:25pm, 19 Dec 2022

After the worst year for initial public offerings (IPOs) in Hong Kong since the financial crisis, bankers and analysts expect a recovery in listings in the Asian financial hub as China moves forward with reopening plans.

Proceeds raised in the city totalled US$12.9 billion in 2022, down 70 per cent versus last year, outpacing the 29 per cent contraction in the Asia-Pacific as a steady flow of deals in mainland China helped boost the broader region.

Hit by Beijing’s regulatory clampdowns, Covid policy and a property crisis on top of concerns over global interest-rate hikes, Hong Kong deals shrank in size this year. While large offerings may take a while to recover, market watchers see a number of mid-sized Hong Kong deals in the first quarter amid rising optimism over the Chinese economy.

“With the transition toward a reopening, we anticipate several delayed Chinese IPOs and follow-on transactions to occur in the near term,” said Murli Maiya, head of equity capital markets for Asia-Pacific at JPMorgan in Hong Kong, adding “these are more likely to be either onshore or in Hong Kong rather than the US.”

Additional share sales increased in the fourth quarter as China announced support for the real-estate sector, triggering hopes for a rebound in the beaten-down sector. Increased placements and sales of share blocks are seen as positive for IPOs as well, as they indicate issuer and investor appetite.