Hong Kong change headed to worst IPO end in a decade

Hong Kong’s inventory change is on monitor for its weakest 12 months since 2012 for brand spanking new listings as the town reeled from the pandemic, rising rates of interest and China’s financial uncertainty, in response to information launched Tuesday.

Hong Kong Exchanges and Clearing (HKEX) stated this 12 months it had 69 new listings elevating HK$87.8 billion ($11.3 billion) as of November 30, down 74 p.c from the 12 months earlier than.

The bourse stated “renewed momentum” within the second half of the 12 months accounted for practically two-thirds of the IPOs, following a droop in the course of the metropolis’s worst-ever coronavirus outbreak.

“The macroeconomic and geopolitical backdrop led to weak sentiment and softness in the global IPO market,” the change stated.

The newest figures had been a steep drop from peak ranges in 2020 when IPOs raised HK$400 billion, as Hong Kong benefited from the bonanza of Chinese mega-companies opting to checklist nearer to residence.

Before the pandemic Hong Kong’s bourse was typically topped as the highest IPO venue on this planet, drawing greater than 100 new listings yearly between 2013 and 2020.

HKEX shares have misplaced 28.3 p.c for the reason that begin of the 12 months whereas the town’s flagship Hang Seng Index is down 18 p.c.

But each have seen a rebound up to now six weeks.

As China pivots in the direction of reopening, bankers and analysts anticipate a slew of mid-sized Hong Kong offers within the first quarter will drive a restoration in listings.

“With the transition toward a reopening, we anticipate several delayed Chinese IPOs and follow-on transactions to occur in the near term,” Murli Maiya of JPMorgan Chase in Hong Kong informed Bloomberg News.

Victoria Lloyd, a accomplice in Baker McKenzie’s Hong Kong workplace, stated she anticipated the IPO pipeline to select up after Chinese New Year.

“With China opening up, everyone is hoping that next year will be a better year—because there is a solid IPO pipeline, with a series of companies that have submitted applications for listings or are waiting to do so,” Lloyd informed Bloomberg.

HKEX stated Tuesday that it had bolstered its widespread “Connect” franchise this 12 months that hyperlinks to bourses in Shanghai and Shenzhen, which can quickly prolong to interbank rate of interest swap markets.

This 12 months Hong Kong additionally noticed the itemizing of 4 particular objective acquisition corporations (SPACs)—funding autos generally referred to as “blank cheque” corporations.

HKEX began to permit SPAC listings this 12 months, topic to a strict framework, in a bid to spice up competitiveness following within the steps of regional rival Singapore.

But SPACs have largely fallen out of favor this 12 months on Wall Street amid rising inflation, rate of interest hikes and a looming recession.

© 2022 AFP