Hong Kong Tops Global IPO Market in 2019: Report

Hong Kong Stock Exchange

Hong Kong continues to cement its position as the world’s leading hub for initial public offering after the city’s stock market once again ranked first globally in terms of IPO proceeds, according to the latest report released by KPMG.

By the end of 2019, Hong Kong will have completed 160 IPOs, raising a total of HKD 307.8 billion, with a historical high of 145 new Main Board listings, a considerable increase from 130 in 2018.

The fundraising total in 2019 was largely driven by a strong performance in the second half of the year, highlighted by two mega-sized deals: Alibaba’s secondary listing and the listing of Budweiser Brewing Company.

“Hong Kong continues to be the top IPO destination, with mega-sized listings by Alibaba and Budweiser indicating that the local bourse remains highly attractive to Chinese and international companies. This is despite global IPO markets seeing a slight decrease in proceeds and investors being more cautious with their sector selection amid increased economic uncertainty, reflected in the scaling back in IPOs from higher risk sectors globally this year,” said Paul Lau, Partner, Head of Professional Practice and Capital Markets, KPMG China.

The new listing regime in Hong Kong made it possible for IPOs by pre-revenue biotech companies and Alibaba, the first secondary listing with a weighted voting rights (WVR) structure.

TMT claimed the top position in terms of funds raised by sector in Hong Kong, due to the Alibaba offering. This deal alone represented 33 percent of total funds raised in the Hong Kong IPO market during the year.

Fundraising in the A-share market is at its highest level since 2011, with a combined RMB 251.9 billion raised from 200 new listings by the end of 2019. This amounted to an increase of over 80 percent compared to the previous year, primarily due to the debut of the STAR Market, which brought some larger-sized IPOs to the market.

The total number of IPOs in the STAR Market steadily increased to 70, with total funds raised amounting to RMB 81.7 million in 2019, representing 32 percent of total funds raised in the A-share IPO market.

The STAR Market will continue to be a key driver of the A-share IPO market in 2020, supported by a solid pipeline of 87 companies seeking to list as of 8 December 2019, as well as an expected steady flow of new applicants for the near future. The STAR Market will also likely benefit from MSCI’s decision to include the market’s eligible equities in its indices, given that these can be traded under the Stock Connect programme. – BusinessNewsAsia.com