Hong Kong’s stock market has a midsummer’s nightmare as fundraising dries up in worsening trade war and street mayhem

The number of companies seeking to raise capital this year fell by a third to 88 IPOs, with proceeds plunging by 55.9 per cent to US$10.82 billion

July’s listings halved to 15 companies, with their combined proceeds plummeting 57 per cent to US$1.65 billion

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Riot police officers clash with protesters at the junction of Lockhart Road and Percival Street in Causeway Bay. Photo: Winson Wong

Published: 8:00pm, 13 Aug 2019Updated: 5:11pm, 15 Aug 2019

Hong Kong’s stock market is going through its worst summer since 2012, as fundraising activity dwindled to a single initial public offering (IPO) in August, while a worsening US-China trade war and deteriorating civic unrest weighed on sentiments.

The number of companies seeking to raise capital this year fell by a third to 88 IPOs, with proceeds plunging by 55.9 per cent to US$10.82 billion, from the same period in 2018, according to Refinitiv’s data. July’s listings halved to 15 companies, with their combined proceeds plummeting 57 per cent to US$1.65 billion, while a single company is scheduled to go to market in August.

“This year has been a particularly difficult year for the stock market and the stockbroking industry, what with the trade war that has escalated after raging for a full year, and with protests the likes of which we have never seen in this city,” said Gary Cheung Kwok-wai, chairman of Hong Kong Securities Association. The city’s 27,327 licensed traders in 594 firms are expected to lose 10 per cent of their workforce, as the industry goes through a bleak second half.

Hong Kong’s economy had been reeling from regular protest rallies, since a group of protesters ransacked the city’s legislature on July 1. What began as a peaceful civic protest against a controversial extradition bill on June 9 descended into mayhem, with police clashing with protesters to disperse groups laying siege to police stations, gathering en masse in public spaces and blocking commercial streets.

Two days this week, thousands of protesters laid siege to Hong Kong’s airport, one of the busiest transport hubs in Asia, forcing the authorities to cancel hundreds of inbound and outbounds flights. The disruptions stranded travellers, sending the shares of Hong Kong’s hometown carrier Cathay Pacific Airways to a 10-year low.

The deteriorating public order had already taken its toll on the city’s IPOs. Three large listings valued at a combined US$11.05 billion were deferred since June, led by the US$9.8 billion IPO by Anheuser-Busch InBev’s Budweiser Asia unit, which would have been the largest in the world this year.

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