Hong Kong Sees Slowdown in IPO Slowdown Reverse; watch international stations

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HONG KONG – Hong Kong has more than 100 pending IPOs and is considering more companies and investors from markets such as the Middle East and Southeast Asia, said the president of the city’s stock market operator.

China’s economic slowdown, a sweeping regulatory crackdown that has tightened scrutiny of corporate fundraising outside of mainland China, and geopolitical tensions have all resulted in a dismal year for new listings in Hong Kong.

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In recent years, anti-government protests, the imposition of a sweeping national security law and punitive COVID-19 containment measures have also clouded Hong Kong’s status as a top financial hub.

Chinese company IPOs account for most IPOs in Hong Kong, one of the world’s leading listing venues and a major driver of revenue and fee income for the world’s largest investment banks.

About $6 billion has been raised through 50 IPOs so far this year in the Asian financial hub, according to Refinitiv data, down sharply from more than $25 billion in 2021. The exchange is in going on to see its lowest IPO proceeds in a decade.

“I have every confidence that IPO market activity will pick up very quickly in the new year,” Laura Cha, chairman of Hong Kong Exchanges and Clearing Ltd (HKEX), said in an interview. at the Reuters NEXT conference.

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“Currently we have over a hundred companies in the pipeline. Many of them are waiting for market sentiment to improve so that their valuations will be better when they come to market,” he said. she declared.

While Cha expects Chinese companies, mainly those in the new economy sector, to relaunch their plans to raise capital in Hong Kong, HKEX is also looking to attract others from elsewhere to boost its reputation in as an international platform.

On the radar are potential investors and issuers from the Middle East and Southeast Asia.

« We’re trying to expand our international footprint in terms of the products we offer, » she said. « In other words, we are going to diversify a lot more (with) a lot more international companies and that will be our strategy. »

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International investors make up around 42% of investment in the Hong Kong stock market, and that share is « much higher » in the derivatives market, Cha said. « So we are already international in nature, but we will continue to expand it. »

Years of strict COVID restrictions have also hit Hong Kong’s economy hard, but the city has lifted most of its restrictions in the past two months.

“With COVID restrictions almost completely removed now, and financial markets also functioning well, I believe we can continue to attract new talent to Hong Kong,” Cha said.

« So for us, like the rest of Hong Kong, there was a higher attrition rate about 12 months ago, and it’s gone down now. »

(To watch the Reuters NEXT conference live on November 30 and December 1, please click here) (Reporting by Sumeet Chatterjee; Editing by Ana Nicolaci da Costa)