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Friday, April 7, 2017, 17:11

Global uncertainties slash IPO fund raising

By Evelyn Yu

Global uncertainties slash IPO fund raising
In this picture taken on Nov 17, 2016, the Hong Kong Exchanges and Clearing Limited (HKEx) flag is seen hoisted outside Exchange Square in Hong Kong. (Anthony Wallace/AFP)

Funds raised through initial public offerings (IPOs) in Hong Kong dropped 53 percent in the first quarter of this year as global market uncertainties weighed on sentiment.

By March 31 this year Hong Kong had completed 39 listings. The number was 105 percent up from last year but most were small IPOs; funds raised dipped from HK$28 billion ($3.6 billion) in the first quarter of last year to HK$13.3 billion.

A wave of financial service institutions listed last year but the first quarter of this year saw IPOs from educational and medical institutions, which took up four out of the top five in terms of funds raised.

The drop was in line with an anticipated slow start for the Hong Kong stock market this year as many big companies adopted a wait-and-see attitude amid a volatile global market

Edward Au, co-leader of the National Public Offering Group at Deloitte China, said the drop was in line with an anticipated slow start for the Hong Kong stock market this year as many big companies adopted a wait-and-see attitude amid a volatile global market.

READ MORE: Key mainland investors get clearer path to IPOs in HK

Global prospects were clearer, however, as the United States interest-rate rises had limited fallout, the impact of yuan depreciation had been mild, the Chinese mainland’s economic performance had stabilized and worries over the effect of Britain’s departure from the European Union were subsiding, Au said.

He was upbeat about Hong Kong’s IPO market, forecasting three or four jumbo listings for the second half of this year with at least 120 IPOs raising about HK$160 billion. This would secure Hong Kong a spot in the top three IPO markets worldwide.

On the other hand, new listings on the mainland hastened, with 134 A-share IPOs raising HK$78.4 billion, a five-fold jump from the 24 IPOs in the first quarter of last year.

ALSO MORE: HK keeps IPO crown with more mainland enterprises

Anthony Wu, who heads the China A-Share Capital Market section of the National Public Offering Group at Deloitte China, said that as the new share issuance registration-based regime was no longer mentioned in recent discussions of amendments to the Chinese Securities Law, the rapid pace of IPOs was expected to continue.

The accounting firm estimated the more than 600 existing listing applications would be approved in the next 18 months at the soonest.

The New York Stock Market has reclaimed the top spot in the first quarter of this year, with 15 IPOs raising HK$47.1 billion.

evelyn@chinadailyhk.com

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