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Hong Kong
Opinion
SCMP Editorial
Editorial
SCMP Editorial

Hong Kong must keep its eye on IPO prize

  • More than just bragging rights, the health of the capital market can also underscore the city’s status as a global financial hub

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The Connect Hall at HKEX in Central. Photo: Jonathan Wong
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.
Slowly but surely, Hong Kong is getting its financial mojo back. As the government gradually reopens to the world with the easing of Covid-19 restrictions, the city has shown it is still indispensable to global finance. Bosses of some of the world’s biggest banks and investment houses are rushing to join the Global Financial Leaders’ Investment Summit to be held early next month. And the latest data shows that despite the pandemic, the city still managed to rank fourth among the biggest initial public offering (IPO) markets globally while Shanghai’s Star Market takes the top spot. With more IPO candidates in the pipeline, Hong Kong’s spot in the ranking may still move up. The city was number one in seven of the past 13 years; it’s imperative we get back to the top.

In the first nine months of the year, it managed 47 IPOs that raised US$8.8 billion, thereby rising from its 10th-place ranking in June. Meanwhile, Singapore failed to make it on the IPO ranking compiled by Refinitiv as its main board did not host any new stock sales during the same period. However, the Lion City did jump to third place behind New York and London in the latest Global Financial Centres Index, that is, one place ahead of Hong Kong. Given the traditional rivalry between the two cities, the race is back on.

Of course, the world of finance cannot ignore the economy. The capital market is one way of gauging the overall health of the economy, which is still struggling. But the annual IPO rankings are not just bragging rights. They underscore the depth and breadth of liquidity in the world’s capital markets, and offer a road map of sorts that show entrepreneurs where to raise funds. An active IPO pipeline provides a virtuous circle to sustain a vibrant stock market on which the livelihoods of financial professionals – banks, brokers, lawyers, accountants, public relations firms – depend. That in turn attracts more and bigger deals.

Close to 200 companies have been given the green light to launch their IPOs in Hong Kong. They have six months to pick the best time to launch. As market conditions improve and confidence returns, more of them will debut, perhaps even before the year ends.

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Once again, the naysayers will be proven wrong.

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