Hong Kong is expected to clinch fewer initial public offering deals and raise less capital next year amid macroeconomic headwinds, according to accounting firm Deloitte China.
The city remains the world’s second largest IPO venue for the second consecutive year, trailing only the New York Stock Exchange and followed by the London Stock Exchange.
It is expected to raise HK$227.9 billion (US$29.37 billion) from 115 IPOs this year, up 35 percent and 11 percent respectively from 2013.
Deloitte, however, sees Hong Kong slowing down in 2015, closing the year with HK$180 billion to HK$220 billion from about 110 IPOs.
Edward Au, a partner at Deloitte’s National Public Offering Group, said the decline will come on the back of China’s economic slowdown, plummeting oil prices, uncertainty in the Federal Reserve’s timetable to raise interest rates and the weak eurozone.
The city is expected to host seven to eight jumbo IPOs next year, raising a total of about US$80 billion. That will be much smaller than the US$180 billion raised from eight jumbo IPOs this year.
The new IPOs will include two to three banks, two brokerages, one pharmaceutical company and one technology firm, Au said.
But despite the headwinds facing the Hong Kong IPO market, the city will still rank among the three largest IPO markets, especially with the help of the Shanghai-Hong Kong Stock Connect.
“The product will be more diversified, and there will be more international channels to use renminbi,” Au said.
As a result, Hong Kong will become an IPO market for raising renminbi in the foreseeable future, he added.
The Shanghai Stock Exchange is unlikely to take over Hong Kong’s position next year, despite a large pool of more than 600 candidates awaiting A-share listing review on the mainland.
“The China market is directed by the authorities, and the number of IPOs is regulated,” said Dick Kay, partner of audit at Deloitte. “The quantity will not increase by leaps and bounds in a short time.”
Kay also said the China Securities Regulatory Commission is expected to slow down the approval of IPOs on the mainland after seeing the bullish trend of the Shanghai and Shenzhen stock markets.
Deloitte expects the A-share market to list as many as 200 companies next year, raising 100 billion to 120 billion yuan, compared with 122 IPOs and 77.4 billion yuan in 2014.
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