China and HK IPO market forecast in Q4 positive: Deloitte

HK remains a preferred overseas listing destination for Chinese companies.

Deloitte China's new Capital Market Services Group released its latest analysis of the performance of Chinese Mainland and Hong Kong initial public offering (IPO) markets in the first three quarters of 2021 on 24 September.

By 30 September, the Shanghai Stock Exchange will have claimed third place in the global stock exchanges ranking by IPO proceeds, followed by Hong Kong Stock Exchange in fourth and Shenzhen Stock Exchange in fifth.

Hong Kong is expected to have seen 73 IPOs raising about $288.5b in the third quarter (Q3) 2021. Although this will mean IPO volume is down 26% from Q3 2020's 99 IPOs, proceeds will have risen about 37% from $211.4b. More than 60% of the proceeds will be from mega-deals. A majority of deals will have involved companies in the new economy and those with weighted voting rights (WVR) structures.

"We have been delighted to see weighted voting rights structures become so well received by investors in such a short time since the WVR regime was introduced, with deal volume and value risen from last year's level. This demonstrates the advantages of Hong Kong's ecosystem for technology and innovative companies and connectivity with the Mainland in capital markets and regulation," said Capital Market Services Group offering services leader Dick Kay.

Deloitte China's Capital Market Services Group predicts that so long as there are no substantial changes to regulatory measures, the Hong Kong IPO market is well set to meet its forecast of about 110-120 IPOs raising nearly $400b by the end of December 2021.