30pc drop in IPOs but rebound tipped

Caroline Zheng

The Hong Kong exchange has fallen to 10th in the global ranking for new listings, but may rebound to top five as the bourse seeks to shorten the time for reviewing applications.

According to Deloitte China, new capital raised by initial public offerings in the first three months dropped 30 percent to HK$4.7 billion from a year ago, the worst first-quarter performance since 2009.

The number of new listings during the period was also down by 33 percent to 12 from the year before, the accounting and consulting firm added.

Hong Kong Exchanges and Clearing's chief executive Bonnie Chan Yiting said the median time needed to approve an application for listing on the main board was shortened to 48 business days in 2023 from 70 in 2022, expressing confidence that this can be further improved.

Speaking yesterday, Chan said the number of listing applications increased 30 percent year-on-year to a total of 65 in the first quarter. However, companies wanted to wait for an ideal price before going ahead with IPOs.

Deloitte said low turnover and valuation of local stocks is believed to have led to a slowdown in the IPO market in the first quarter and caused the city's exchange to drop four places in the global ranking. Hong Kong ranked sixth last year.

Deloitte said the Shanghai and Shenzhen exchanges also have seen their rankings drop amid tightened regulation.

The world's top five IPO destinations in the first quarter were the New York Stock Exchange, Nasdaq, SIX Swiss Exchange, National Stock Exchange of India and Shanghai Stock Exchange, according to Deloitte data.

The Shenzhen Stock Exchange fell to seventh place, followed by the Athens Stock Exchange in Greece and Saudi Exchange in eighth and ninth, respectively.

However, Deloitte maintained its forecast for Hong Kong's full-year IPO performance, expecting 80 firms to raise HK$100 billion in 2024, that would help the city rebound to the top five globally at year-end.

Although some potential issuers await a market valuation rebound, certain companies are committed to listing in Hong Kong despite the environment due to pressing fundraising needs to support business development, said Deloitte China southern region managing partner Edward Au Chun-hing.

caroline.zheng@singtaonewscorp.com