Hong Kong IPO market slated for resurgence in H2

PwC Hong Kong is “cautiously optimistic” for the market.

Hong Kong’s IPO market will rebound in the second half of 2024, according to estimates by PwC.

There could be as many as 50 companies who may go public in the second half of the year– according to PwC’s estimates of around 80 listings for 2024– and some may even raise over HK$5b.

PwC forecasts that fund raising may total between HK$70b to HK$80b, with market focus in the second half of the year will be on industries such as TMT, AI and retail, consumer goods & services.

There were only 30 new listings in Hong Kong between January to June 2024, including 20 companies listed in the mainboard and one GEM board listing. Total funds raised in the market reached HK$13.1b– a 27% drop compared to the same period in 2023.

The persistently high interest rates and inflation may have deterred investors, leading to modestly sized IPOs, PwC said.

But with interest rates expected to fall in the second half of the year, Hong Kong’s IPO market is poised for a rebound, said Eddie Wong, PwC Hong Kong capital market leader.

“The anticipated listing of Chinese concept stocks and technology companies, especially in the form of specialist technology companies, is expected to contribute to stability and confidence in the city's capital market,” Wong said.

The implementation of the new Chapter 18C listing regime will also play a “pivotal” role in the resurgence. Wong expects that it will help connect high-growth technology companies with investors.

“The first company under the Chapter 18C listing regime successfully listed in Hong Kong recently. It is anticipated to further promote the development of the entire technology industry ecosystem,” Wong said.

Demand for corporate financing will also continue to be a major driving force, according to PwC.

“With the end of the interest rate hike cycle, global capital from Europe, the United States, and the Middle East is expected to return to Asia, stimulated by the major central banks starting to cut interest rates. This influx of capital will increase market liquidity and valuations,” PwC said, expressing that they are “cautiously optimistic” for the IPO market.

Hong Kong's IPO market has reportedly shown signs of gradual recovery in the second quarter of 2024. Over 100 companies have submitted listing applications to the Hong Kong Stock Exchange, some of whom have been successfully registered with the China Securities Regulatory Commission.