Hong Kong listings remain muted as cautious issuers play wait-and-see, law firms say
- ‘People need to see a little bit more certainty on where the equity markets are heading,’ says Clifford Chance’s Jean Thio
Weak market sentiment and general economic uncertainty in mainland China continues to breed caution in Hong Kong’s capital market, causing potential issuers to extend their windows for new share offerings, according to law firm Clifford Chance.
“We have had deals where the issuer has been looking at the market, and even with listing approval they might decide to go out to the market at a later stage” said Jean Thio, Shanghai-based partner at Clifford Chance. “This creates a longer window where we’re working on deals.”
High interest rates and global economic uncertainty depressed initial public offering (IPO) fundraising in Hong Kong by 35 per cent year on year to HK$11.6 billion (US$1.5 billion) in the first half, according to KPMG. Deal volume fell 15 per cent to 27 new listings, and the average deal size plunged 25 per cent to HK$428 million. However, last month Hong Kong Exchanges and Clearing, the city’s bourse operator, said it had 106 listing applications in its pipeline, up from 73 a year earlier.
“We have good candidates in the pipeline and we can see quite a lot of interest in them,” Thio said. “But we don’t know if they’ll choose to do the fundraising now or wait until they think they’ll get a better valuation.”
Many companies have waited long enough that their listing applications have lapsed as the city’s capital market activity remains muted.