Hong Kong is expected to draw about 220 new listings this year, with the total fund-raising in the IPOs envisaged to be in the range of HK$200 billion to HK$250 billion, according to accounting and consulting giant PwC.
Eddie Wong, a PwC partner, said at a news conference Tuesday that Hong Kong’s strong IPO run will continue in the second half of 2018 after a 50 percent year-on-year rise in new listings in the January-June period.
Issuers will be encouraged by strong market demand for new supply of equity, he said, predicting the total IPO fund-raising this year to be as much as HK$250 billion, which is “still a rather conservative estimate”.
In other comments, Wong noted that 70 percent of the new listings in the first half saw gains in their share prices on the first trading day.
Issuer activity shows a favorable response to new IPO regulations, he added.
That said, some uncertainties threaten to cast a shadow over the Hong Kong market and the IPO activities here, said Benson Wong, Entrepreneur Group leader at PwC Hong Kong.
If a trade war continues between the US and China, Hong Kong can only secure a top three position among global markets in terms of fundraising.
But if the trade row ends quickly, Hong Kong market can raise more than HK$250 billion and reclaim the top place in the world, he said.
On other topics, Benson Wong said Hong Kong and China markets are in a learning curve in relation to some market reforms, a fact that that could affect the of IPO listings.
Yet, the China Securities Regulatory Commission’s tightening policies will benefit Hong Kong’s IPO market as companies will prefer to finance their companies faster in Hong Kong, even if means sacrificing potential higher listing prices that could arise from deals done on the mainland, he said.
According to PwC, IPO listings on three China main boards are estimated to fall to 120 in number this year.
IPO in Hong Kong is also an alternative to issuing bonds for Chinese and Southeast Asian companies, Eddie Wong pointed out.
“According to what we heard, three companies listing in the second half of the year will raise HK$100 billion in total,” Benson Wong said.
Among other comments, the PwC executive said he is confident that the first Chinese depositary receipts (CDR) issuance on the mainland will happen in the second half of 2018.
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