Volatile batch markets in mainland China and signs that a country’s economy is negligence seem to have had small impact on Hong Kong’s initial open charity (IPO) market, that incited in a clever opening adult to final month.
Benson Wong, IPO and declaration leader, businessman organisation during PwC Hong Kong, says a city ranked No 1 in a universe in a initial 8 months of this year for IPOs, interjection to a volume and supports raised.
He adds that Hong Kong’s IPO marketplace faces hurdles as a outcome of China’s “slowing economy”, and a diseased tellurian economy. In addition, there are whinging mercantile uncertainties caused by Brexit – Britain’s preference to leave a European Union – and a gait of probable US seductiveness rate hikes.
Nonetheless, Hong Kong had a stellar year for IPOs, compared with other batch exchanges.
“We design some-more irresolution in IPO activity in Hong Kong for a remaining 4 months, generally in a fourth entertain – a normal rise deteriorate for IPO listings. Hong Kong’s fundraising marketplace looks staid to take a tip mark in a world,” Wong says.
“For a initial 8 months of 2016, IPOs of financial services companies continued to lead a race, creation adult over 80 per cent of sum supports carried on a categorical board. This reflects a fact that many mainland banks and financial institutions continued to actively pursue optimal timing to list in Hong Kong to lift collateral and accommodate destiny expansion needs.
“We design listings in Hong Kong for 2016 to continue their concentration on financial services. The trend of financial services heading forward is approaching to extend from 2015 good by a whole of 2016 and will continue in 2017.”
Ringo Choi, EY’s Asia-Pacific IPO leader, says Hong Kong saw 62 IPOs, lifting HK$75.09 billion in a initial 8 month of this year, induction a 1.5 per cent and 51.7 per cent diminution by a series of deals and by supports raised, respectively, compared to a same duration of final year.
He adds that after Britons voted to leave a European Union in June, “a series of companies chose to list in Jul that carried a series in a third quarter. However, supports carried forsaken overdue to a miss of mega IPOs.”
Echoing Choi’s perspective is Louis Lau, partner of collateral markets advisory organisation during KPMG China. “While Hong Kong managed to keep adult with a series of IPOs, a deduction declined some-more than 50 per cent. This was due to a fact that a marketplace was dominated by smaller-sized deals. The financial services zone continued to browbeat a Hong Kong IPO marketplace in a initial 8 months of 2016, accounting for over 70 per cent of sum supports carried for this period. “However, a weighting has increasing due to an deficiency of sizeable deals from other sectors. With serve mega IPOs from a banking zone anticipated, a financial services zone is approaching to take adult a immeasurable infancy of a IPO cake in 2016. Other sectors will expected uniformly share a remaining market.”
Besides banks, other financial IPOs have also debuted in Hong Kong, such as leasing companies, Choi notes. “One of a reasons is that leasing companies are good perceived in a Hong Kong marketplace that has a improved general repute for a issuers.”
Hong Kong is also toying with a thought of introducing a new third house with reduce entrance requirements, targeted during veteran investors, and this could “further boost Hong Kong’s lure to tech companies and assistance to enhance a intensity financier population”, Lau adds.
Edward Au, Deloitte China’s co-leader of a inhabitant open charity group, thinks Hong Kong is confronting a problem of carrying a reduction appealing gratefulness for a record zone than markets in a US and mainland China. Valuation has been a essential cause for companies to name their inventory venue and this emanate has disheartened record firms from inventory here.
“There is an event for a regulator to take from an arriving conference on a positioning of a expansion craving marketplace [GEM] to boost [Hong Kong’s] competitiveness for tech firms,” Au says.
“As a immeasurable GEM issuers have emerged into some-more different opening and portfolios over a years, it is time to cruise differentiating these companies to assistance investors lessen a investment risks by such means as substantiating a tier system, that is identical to what a NASDAQ in a US is.”
Hong Kong could “consider substantiating a third-board market, that can act as an incubator for fast-growing and budding tech firms, such as those from a biotech industry, for veteran investors”.