Hong Kong holds lead in IPOs

Business | Dominique Nguy 27 Sep 2016

Hong Kong is expected to maintain its position as world's largest initial public offering market, raising about HK$200 billion with 115 listings, a report by Deloitte estimated.

The firm said three to four jumbo IPOs, including a securities group and a pharmaceutical group, each targeting to raise at least HK$7.8 billion, are in the pipeline for the fourth quarter.

Edward Au, co-leader of the national public offering group of Deloitte China, said factors such as the yuan's inclusion into the International Monetary Fund's Special Drawing Right basket, investment from mainland's insurance companies into Shanghai-Hong Kong stock connect and the potential launch of Shenzhen-Hong Kong stock connect have supported Hong Kong's lead.

Meanwhile, Au said Hong Kong is expected to maintain its lead in terms of total funds raised and number of IPOs.

Au said total funds raised in the first nine months this year is estimated to be HK$136.4 billion, down by 13 percent from the same period last year, and the number of IPOs fell from 72 to 71. More than 80 percent of this year's funds raised were from Chinese financial service institutions, a jump from 49 percent last year.

Among the new listings, 29 out of 71 IPOs, or 41 percent, were from the mainland.

Au said a general decline in both funds raised and number of IPOs was partly due to a more cautious investment atmosphere.

He said the drop in number of listings is also partly due to an increase in foreign firms listing. Five foreign companies were listed in Hong Kong in the first three quarters, raising about HK$9.2 billion.Only three foreign companies were listed in Hong Kong in the same period last year. There are still another 15 foreign companies in the listing pipeline, said Au.

Meanwhile, Au believes mainland companies delisting from the Hong Kong stock market is not a general trend as the cost is too high.

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