Editorial | Markets are the most fickle friends of all
- Hong Kong is once again in the limelight when it comes to IPOs but investors should remain cautious as the costs of the 2019 social unrest and Covid-19 curbs are still being counted
The 2019 anti-government protests followed by the Covid-19 pandemic have dealt a terrible blow to Hong Kong’s treasured position as the world’s premier hub for initial public offerings. Thankfully, as society has regained its footing and the health crisis recedes, the IPO business is roaring back.
Hong Kong has gained a third spot among the world’s IPO hubs for 2022. Following a disappointing first half, the market recovered as five IPOs hit the market at the tail end of the year. That has helped lift sentiment as the city reopens its borders with the mainland. Hong Kong overtook Seoul to claim third place and is just behind Shanghai’s Star Market at the top and Shenzhen’s ChiNext market coming in second.
After a brutal year in equities as global interest rates rose relentlessly, local retail investors may welcome the new year with cautious optimism. Because of the continuing threat of delisting by American regulators and politicians, more mainland Chinese companies listed in the US will opt for a secondary listing in Hong Kong.
The city is also expected to benefit from mainland regulatory reforms, which will allow the listing of more pre-revenue technology companies; and the introduction of yuan-denominated stock trading and the inclusion of Hong Kong-listed overseas companies for mainland investors under the Stock Connect scheme.
It is worth noting that Hong Kong’s traditional rivals, the Nasdaq and New York Stock Exchange, were both out of the top 10 for IPOs after a 95 per cent year-on-year drop in funds raised. Meanwhile, Singapore did not host a single IPO on its main board last year.