2017 Q1 Review and Outlook of Chinese Mainland and Hong Kong IPO Markets

According to the latest analysis of the initial public offering (IPO) markets of the Chinese Mainland and Hong Kong conducted by the National Public Offering Group of professional services organization Deloitte China, in the first quarter of 2017, the New York Stock Exchange reclaimed the top spot in the world in terms of total IPO proceeds with the market excited about the positive outlook of U.S. economic policies. At the same time, encouraged by the regulator, new listings hastened on the Chinese Mainland and surpassed the number afforded by the Hong Kong market which was dominated by small offerings.

When the market has become used to U.S. interest rate hikes, China’s economic performance stabilizes, impacts of the Brexit subside and major elections in the Eurozone are over in the new few months, the economic environment is going to zest up and Hong Kong is expected to see more larger new listings from the Chinese financial services and technology, media and telecommunications sectors. These offerings are going to be those benefiting from ongoing reform in the Chinese financial sector and companies thriving in the new economy.

Though the new share issuance registration-based regime is no longer mentioned in recent discussions of amendments to the Chinese Securities Law, as long as the stock market is stable, IPO pace in the remaining months of the year is expected to stay. As such, Deloitte expects the existing more than 600 listing applications to be approved and taken to market in the next 18 months at the soonest.

The Shanghai Stock Exchange, may be competing head-to-head in the upcoming three quarters, with the Hong Kong Stock Exchange, if the market continues to be supportive. The gap between the performance of Mainland and Hong Kong IPO markets is expected to narrow from the second quarter onwards.