Shanghai and Hong Kong to vie for second and third positions in 2017 global IPO fundraising race
Published: 21 September 2017
The National Public Offering Group (the Group) of professional services organization Deloitte China today released its review and outlook of the Chinese Mainland and Hong Kong's initial public offering (IPO) markets for the first
Deloitte expects Hong Kong to complete new listings for 106 companies raising about HK$85.0 billion for the year-to-date by 30 September 2017 against 71 IPOs raising HK$134.3 billion in the same period last year. This represents a sharp rise of 49% in the number of new listings but a drop of 37% in the IPO funds raised year-over-year. The surge in the number of IPOs on the Growth Enterprise Market (GEM) and the overall reduced offering scale of the mega IPOs contributed to this year's phenomenon.
"Hong Kong's IPO market has clearly diversified in its role not just as a preferred listing destination for blue-chips and large Chinese business or state-owned enterprises but also a fundraising venue for potentially high-growth local and international small-and-medium enterprises (SMEs)," commented Mr. Edward Au, Co-Leader, National Public Offering Group of Deloitte China. "The strong enthusiasm from the local and international SMEs to tap Hong Kong’s bullish market this year for growth and development has boosted IPO debuts on and a long listing application pipeline for the GEM. Many of these businesses are still relatively young but with a brand name when compared with their reputable peers on the Main Board," Mr. Au noted.
At the same time, for the year-to-date to the end of the third
Mr. Anthony Wu, Leader of the A-Share Capital Market of the National Public Offering Group at Deloitte China
Despite the vibrant performance from Hong Kong,
"We are positive about the outlook of Hong Kong's IPO market in the last quarter of 2017 and foresee another one to two large IPOs from the technology sector to complete before the end of the year. These new listings tend to be well-received under the current supportive sentiment towards technology and new economy-concept business. As the IPO review and approval process on the Mainland continues to present uncertainties for some applications, the likelihood of certain larger property developers and banks to go public in the remaining three months there may be small. We, therefore, believe the current ranking for the top three stock exchanges may remain unchanged for the remainder of this year," explained Mr. Au.
With a pipeline of more than 180 companies that have submitted IPO applications, Deloitte forecasts Hong Kong can readily conclude with 140-150 IPOs by the end of the year. However, the Firm's analysis indicates that the attainment of a level of IPO proceedings of approximately HK$130 billion-150 billion for 2017 is still subject to factors including favorable global macroeconomic conditions such as expectation over a potential delay in the timetable of U.S. interest rate hikes, U.S. tax reform, and China's 19th Communist Party Congress and whether another huge IPO is completed before the end of year. However, the impact of the Belt and Road Initiative and the high overall market valuation is likely to lure more overseas infrastructure and property-related companies and international businesses to explore listing opportunities in Hong Kong.
Mr. Au also welcomes the strong ongoing support from both the government and regulators for policies and measures such as a plan for developing the cluster of cities in the Guangdong-Hong Kong-Macau Greater Bay Area and the Lok Ma Chau Loop as well as market consultations on enhancing Hong Kong's listing regime. These developments in aggregate are believed to help strengthen the ecosystem of the city's new economy and
As for the outlook of Mainland's new listing market, the trends that were observed in the previous quarters are likely to be maintained moving forward. These include the dominance of small and medium manufacturing and technology companies in terms of the number of upcoming new listings and fast pace of IPOs under the existing regulatory regime. Deloitte, therefore, anticipates the Chinese Mainland to finish 2017 with about 420-480 IPOs raising approximately RMB220-250 billion.
Notes to editor:
Unless specified otherwise, all statistics were updated with assumptions as at 30 September 2017.
Sources of the statistics for the Hong Kong IPO market: the Stock Exchange of Hong Kong, Deloitte's estimates and analyses, assuming the successful listings of Precision Tsugami, ZhongAn Online P&C Insurance, Cool Link, China Wan Tong Yuan and Noble Engineering Group from 22 September to 29 September 2017, and excluding the transfer of listings from GEM Board to the Main Board and proceeds of five newly-listed companies at the Main Board raised from their market stabilization actions by 30 September 2017.
Sources of the statistics for the A-share IPO market: China Securities Regulatory Commission, Deloitte's estimates and analyses, including the assumption of the trading in the shares of 12