Proceeds from initial public offerings in Hong Kong topped HK$129.4 billion (US$16.7 billion) in the first half, the largest in the world during the period.
The number of IPOs rose 2.3 percent year on year to 45, excluding listings by introduction and transfers from the Growth Enterprise Market (GEM).
A few large deals helped boost proceeds by 57. 6 percent, KPMG said on Thursday.
Hong Kong’s stock market is likely to sustain its strong run for the rest of the year, with a number of Chinese financial services providers, pharmaceutical and environmental firms planning to go public, it said.
Meanwhile, the upcoming Shenzhen-Hong Kong Stock Connect is expected to help increase competition among stock markets.
As of June 30, there were 62 active listing applications to the Hong Kong stock exchange.
However, challenges exist from ongoing financial and market reform in the mainland.
This includes a switch to a registration-based regime from an approval-based system for new listings, development of the New Third Board and a proposed Emerging Board by the Shanghai Stock Exchange, among others, KPMG said.
Louis Lau, partner of KPMG Capital Markets Group, said Hong Kong “needs to find ways to maintain its competitiveness”.
Hong Kong Exchanges and Clearing (HKEx) could consider repositioning the GEM board to attract smaller companies, start-ups or candidates that have no track record of profitability, Lau said.
He said HKEx could also explore ways to attract secondary IPOs by companies with primary listings overseas.
Lau said the trend of Chinese technology firms unwinding their variable interest entities structure and returning to the A-share market is unlikely to have a big impact in the near term because the process takes time.
However, once they are ready to return, Hong Kong will face severe competition from the A-share market in terms of attracting companies to list in Hong Kong.
KPMG estimates HK$200 billion in fundraising proceeds from 110 Hong Kong IPOs this year.
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