Strong investor interest and plenty of liquidity lifted the number of debuts in Hong Kong to a decade high in the first half, putting the city on track to stay one of the top three global IPO markets in 2014, PricewaterhouseCoopers said Wednesday.
PwC expects an estimated 110 initial public offerings to raise a total of HK$180 billion (US$23.1 billion) in 2014, down from the HK$230 billion estimate earlier this year, the accounting firm said.
There were 52 listings in the city in the first six months, raising a total of HK$81.2 billion. The number of companies listed and total fundraising more than doubled, cementing Hong Kong’s reputation as an attractive listing destination, PwC said.
“A lot of companies especially small and medium enterprises are still interested, and are in fact, preparing for a Hong Kong listing,” Edmond Chan, PwC Hong Kong capital market services group partner, said.
“Given the stable growth in China’s economy with improving fundamentals, we expect to see more IPO activity in areas such as retail and consumer goods, telecommunications and internet-related sectors and financial services. There will also be some IPOs raising more than HK$10 billion in the second half.”
PwC Hong Kong assurance partner Benson Wong said fundraising activities in Hong Kong were vibrant in the first half but pricing was adjusted in some cases due to global economic and geopolitical risks.
“However, the total number of new listed companies and the total size of fundraising are proof of the strong liquidity in the market and that investors’ interest in IPOs remains strong,” Wong said.
At the same time, market players are still adapting to the resumption of the mainland IPO market, prompting some mainland companies to switch to Hong Kong to tap global investors and funds, it said.
In the first half of 2014, most of the listings on the main board were in retail and consumer goods, followed by financial services, energy and mining as well as IT-related areas.
“We also expect the Chinese IPO market to rebound in the second half of the year when financial reform deepens and market sentiment improves. About 150 IPOs with total fundraising of between 100 billion yuan (US$16.1 billion) to 150 billion yuan to be seen in 2014, which will be the same as the Hong Kong market in terms of fundraising,” Wong said.
After the resumption of mainland IPOs, 52 companies listed on the Shanghai and Shenzhen stock markets in the first half, raising 35.2 billion yuan.
Frank Lyn, PwC China and Hong Kong markets leader, said he does not expect there to be any mega-size fundraising activities on the mainland in the short term.
“As market participants are still adapting to the new listing rules, we believe the mainland IPO market will improve and keep pace with Hong Kong after the break-in period, coupled with stable economic growth,” Lyn said.
The firm also said the Shanghai-Hong Kong Stock Connect scheme to be launched in October could attract more mainland companies to list in Hong Kong as H shares because the scheme will allow mainland investors to trade Hong Kong stocks.
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