IPO markets in Hong Kong and Chinese Mainland
2016 Q3 Review and Outlook
According to the latest review and outlook analysis of the initial public offering (IPO) markets of Hong Kong and the Chinese Mainland conducted by the National Public Offering Group of professional services organization Deloitte China, having backed by a number of large share flotations from Chinese financial services institutions, Hong Kong is expected to maintain its leadership in the global IPO fundraising ranking towards the end of third quarter of 2016. Without any prominent new listings, stock exchanges in Shanghai and Shenzhen are to follow that in New York.
By 30 September 2016, Hong Kong would have more than 80% of funds raised from Chinese financial services institutions, a significant jump from 49% of last year. The no-go decisions with U.S. interest rate hike in July and September helped excite the market and hurled some large offerings in July and thereafter. After months of concern over the downward pressure on the Chinese economy, the market was glad to see signs in August indicating that the Chinese economy is improving as well.
Looking ahead, Hong Kong's IPO momentum is expected to be braced capital inflows after the Renminbi is added into IMF's Special Drawing Right basket, investment from Mainland's insurance companies into Shanghai-Hong Kong Stock Connect, and the U.S. interest rate hike expectation stabilizes.
At the same time, the IPO performance in Shanghai and Shenzhen are expected to be weakened when compared with last year despite a rebound in the third quarter after six slow months from the beginning of the year. A mega listing from a city commercial bank in August at last after none from the banking sector in China for many years has encouraged three other similar banks to go public and more are expected to join them.
In the fourth quarter, IPO activities at Shanghai and Shenzhen, however, are anticipated to remain stable at efforts of the authorities to regulate the stock market. Many of the IPOs will still be of manufacturing and technology companies and of small and medium scale.