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Monday, September 26, 2016, 17:58

Hong Kong set to retain IPO crown: Deloitte

By Lin Wenjie

HONG KONG - Hong Kong is expected to remain the world’s largest initial public offering (IPO) market in 2016, but its results will dip compared to the previous year, according to global audit and advisory firm Deloitte.

Deloitte forecasts a total of 115 IPOs in Hong Kong in 2016, raising about HK$200 billion -- both down on the previous year. This is due to global insecurity stemming from a likely interest hike by the US Federal Reserve at the end of 2016, the slowing down of Chinese mainland economy and uncertainties brought by the US elections and the United Kingdom’s impending exit from the European Union.

Hong Kong still maintained its place as the world's largest IPO market in the first three quarters despite global uncertainty, the firm’s latest research report found. Statistics showed that there were 71 IPOs in the local bourse, a 1 percent dip compared with the same period last year.

These IPOs raised about HK$136.4 billion, down 13 percent from a year earlier, and more than 80 percent of the funds raised were from Chinese financial services institutions, compared to 49 percent last year.

Deloitte said capital inflows to the Hong Kong market will continue to increase in the fourth quarter, after the renminbi was added into International Monetary Fund’s Special Drawing Right (SDR) basket as its fifth currency. It will also be boosted by investment into the Shanghai-Hong Kong Stock Connect from Chinese mainland insurance companies.

"There are three to four jumbo IPOs (planned) for the Hong Kong market in the last quarter, including a securities group and a pharmaceutical group, each targeting to raise at least HK$7.8 billion, and Hong Kong is going to see its IPO leadership further cemented," said Edward Au, co-leader of the national public offering group at Deloitte China.

But for the Shanghai and Shenzhen bourses, IPO activity is anticipated to remain stable as authorities seek to regulate the stock market. Deloitte forecasts between 180 to 220 IPOs for two markets in 2016, raising 86 to 106 billion yuan in the A-share market – both lower than the previous year.

Statistics showed that by the end of the third quarter, both Shanghai and Shenzhen markets would have completed 120 IPOs in total, raising about 74.9 billion yuan. Shanghai's IPO market ranked as the world’s third-largest after New York, but Shenzhen dropped out of the top five.

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