Hong Kong capital markets miss a string of opportunities in first nine months

Hong Kong's equity capital markets have put in a strong performance for the first nine months of the year, raising almost 45 per cent more than in the period last year. However, many in the market are still focused on what could have been.

Alibaba Group's record-breaking initial public offering in the US this month has added impetus to a push for the city to re-examine whether the stock exchange operator should change its listing rules to enable the kind of dual-class share structure that the e-commerce giant had sought for a Hong Kong listing.

Meanwhile, companies raised US$40.9 billion in Hong Kong's equity markets in the year to September, including IPOs, follow-on deals and convertible bond offerings, a 44.4 increase from the year-earlier period, according to preliminary data by Thomson Reuters. The nine-month haul represents 88 per cent of the capital raised for all of last year.

Follow-on deals, in which listed companies issue new shares to the public and block trades, dropped 26.5 per cent year on year to US$21.2 billion for the period, despite Citic Pacific raising US$6.9 billion in August for its asset injection deal.

"Hong Kong is undergoing a transitional period in which the Chinese city needs to recover quickly from the loss of Alibaba's flotation, the most important event in recent listing history," said Ringo Choi, Asia-Pacific IPO leader at EY in Hong Kong. He is keen to see more private-sector listings after most state-owned enterprises - a one-timer pillar of the city's IPO market - have gone public over the past decade.

Alibaba raised US$25 billion in its New York listing, making it the world's biggest IPO, valuing the firm at about US$250 billion based on the first day's trade.