IPOs in Hong Kong could raise $260b in 2020: report

Reforms on weighted voting right is boosting diversification of the capital market.

Hong Kong’s IPO market is expected to remain active in 2020, as a healthy pipeline of companies are lining up for floats this year, according to a report by PwC. Total funds to be raised for the year are estimated to be between $230 and 260b.

PwC reckons that more new economy enterprises are expected to seek listing on HKEX in view of the listing regulations reform. There were 184 new listings in 2019, an increase of 20 from 2018’s number of listings. Total funds raised by IPOs in 2019 reached $315.5b, marking a 10% growth from the previous year. With the level of activity in new economy enterprise listings, there was a stronger performance on Main Board, which recorded $314.5b of total fundraising, jumping by 11% from 2018. Meanwhile, funds raised on the Growth Enterprise Market (GEM) Board stood at $1b, an 80% decrease in funds raised.

“The listing regulation reforms, including weighted voting right and bio-tech listing regulation reform, have not only enhanced the diversification of Hong Kong’s capital market, but laid an important foundation for the Hong Kong IPO market,” said Eddie Wong, services partner at PwC Hong Kong Capital Markets.

IPOs for 2020 are forecast to reach to 180, an amount similar to the average fundraising amount for the past ten years. The H-share full circulation programme will help attract more Chinese enterprises to list on HKEX and also assist in moving the H-shares circulation volume in the market, read the report.

Judging by the number of existing listing application submissions, PwC posits that listings of overseas companies in Hong Kong are also expected to remain active in 2020, with the possibility of increasing numbers compared to 2019.