Date
18 October 2017
Inside the Hong Kong Stock Exchange Ahead Of Hong Kong Exchanges & Clearing Ltd. Earnings

The Big Picture: IPO MARKETS

Hong Kong emerged as the world’s second largest initial public offering (IPO) market in 2013, moving up from fourth place a year ago, with the city generating a total of HK$168.9 billion (US$21.78 billion) last year from 104 listings, according to audit and consultancy giant Deloitte.

The city’s IPO market staged a swift recovery since September with a number of multibillion-dollar deals, with sentiment improving especially after top Chinese leaders held a key meeting in November to set the country’s reform agenda for the next five to 10 years.

Looking into 2014, Deloitte expects the market to maintain its growth momentum, with a mega IPO from an energy and resources company that could raise over HK$30 billion in the first quarter of 2014. It also expects four to five city commercial banks and agricultural commercial banks from the mainland to tap the IPO market in Hong Kong this year.

However, it will take a lot more for Hong Kong to regain the IPO crown jewel from the New York Stock Exchange, which raised nearly 100 percent more proceeds with 50 percent more deals in 2013, said Edward Au, co-leader of National Public Offering Group at Deloitte China.

For the mainland’s A-share IPO market, which has been stagnant since November 2012, Deloitte expects about 200 to 230 companies to float their shares this year, raising a combined 150-170 billion yuan.

Although Hong Kong may record more than 20 percent growth in total funds raised from its IPO market to about HK$210 billion this year, excluding the possible listing plan of Alibaba Group, it will be a challenging task for the city to remain as the world’s second largest IPO market as mainland authorities resume approvals for A-share IPOs in the domestic market, according to some observers.

The China Securities Regulatory Commission on Tuesday gave six more companies the go-ahead to sell shares publicly in Shanghai and Shenzhen, after granting approval to five candidates a day earlier. 

Also, the tapering of quantitative easing in the United States remains the biggest threat to global capital markets. The Hong Kong IPO market will inevitably be hurt if a large amount of capital flows out of the Asia Pacific region.

More SOE reform plans in Shanghai

Shanghai has chalked out more plans on state-owned enterprises (SOE) reform in a bid to boost the firms’ competitiveness, the China Securities Journal reported Thursday, citing local officials. Under the plan, Shanghai will encourage private capital into state firms through various routes, such as stake acquisitions, participation in private placements by SOEs, and financial leasing or franchising deals. The city will also study the establishment of an investment fund with joint participation from state and private capital to promote mergers and acquisitions of local SOEs, the report said. Private capital will be allowed into the infrastructure and public utility sectors.

Shanghai bourse to enhance investor rights protection

The Shanghai Stock Exchange said it will enhance investor rights protection further this year to ensure a fair and just market, in keeping with a directive from the State Council, the China Securities Journal reported. The bourse aims to strengthen company information disclosure transparency, with regulations to be tightened to foster healthy development of the market. 

– Contact HKEJ at [email protected]

JP/AC/RC

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