On January 21, 2021, in Hong Kong, China, the Hang Seng Index was displayed on the screen outside the Exchange Square complex where the Hong Kong Stock Exchange (HKEX) is located, with Chinese and Hong Kong flags waving.
China News Service | China News Service | Getty Images
Listing activity in Hong Kong has picked up significantly this year as more Chinese companies turn to the city to raise capital and investors become optimistic after Beijing pledged to support offshore markets.
The value of new listings on the Hong Kong Stock Exchange grew for the first time after three consecutive years of decline, data compiled by Dealogic showed. These include an initial public offering and additional subsequent stock sales.
Hong Kong exchanges have raised a total of $10.65 billion across 63 deals this year, a jump of more than 80% from the $5.89 billion raised across 67 deals in 2023, Dealogic data showed. the lowest level.
In another sign of companies and investors’ renewed confidence in the Hong Kong market, the average deal size nearly doubled from the previous year to $169 million.
The number of companies seeking public offerings in Hong Kong began to increase in the second half of this year as China Securities Regulatory Commission April Committed to supporting the Hong Kong market and promoting the listing of more leading mainland companies.
Experts say Beijing’s stepped-up stimulus package has further stimulated companies’ interest in raising funds in offshore cities and attracted some foreign capital to return.
In terms of initial public offerings alone, Hong Kong will rank fourth globally in terms of funds raised this year, According to KPMGlagging behind Indian and US stock exchanges.
Andy Maynard, managing director and head of equities at China Renaissance, said in an email that “there is significant pent-up financing demand as Hong Kong’s economy attempts to emerge from a pandemic-induced slowdown in 2022.” ”.
Despite some “signs of recovery,” Maynard warned that a further pick-up in Hong Kong IPO activity can only be expected “when we see continued improvements in the onshore economy and geopolitical tensions continue to ease.”
“Signs of Life”
Listing activity in Asia’s financial hub over the years Decline due to geopolitical tensions Rising global interest rates have dampened investor appetite for capital market deals in Hong Kong and Chinese stocks.
China’s economic downturn and stubborn real estate market crisis have also raised concerns among issuers and investors about company valuations.
Wang Qing, chairman and chief strategist of Shanghai Chongyang Investment Management Co., Ltd., said investor sentiment has improved this year, especially for industries that benefit from policy support, such as consumer-related businesses.
Midea Group, which sells consumer goods such as air conditioners, washing machines, and elevators, won the city’s largest listing The company’s Hong Kong-listed shares have jumped more than 36% from its issue price since the start of 2021, and investors remain hopeful that it will benefit. Beijing’s “Old for New Plan” Designed to encourage consumers and businesses to upgrade existing appliances and equipment.
have 90 IPO applications pending for listing or is being processed as of November 29 according to the exchange website.
John Lee, global vice chairman and co-head of Asian countries at UBS, said that while Hong Kong’s IPO pipeline may be more active in 2025, it is likely to be a “gradual recovery” rather than a “V-shaped” recovery Asian Bank Industry.
Mainland investors have bought $96.4 billion worth of Hong Kong stocks so far this year, surpassing last year’s total of $42 billion and heading for the biggest year since an $87 billion buying spree in 2020, according to Goldman Sachs. .
“Foreign long (funds) are also starting to return to China (and) Hong Kong equities, albeit at a gradual pace,” said Perris Lee, head of Asia Pacific equity capital markets at Ion Analytics.
“Not a Santa Claus rally”
Not all newly listed stocks perform well. Chinese self-driving company Horizon Robotics and bottled water maker China Resources Beverage, two of Hong Kong’s biggest IPOs this year, saw their shares fall 12% and 11% respectively from their offering prices as of Wednesday.
Shanghai Chongyang’s Wang said investors need to see “concrete evidence of the effectiveness of stimulus policies”. He expects market sentiment to improve early in the second quarter of next year, when listed companies begin to release earnings reports.
The benchmark Hang Seng Index is headed for its first annual gain after four straight years of declines, surging more than 16% so far this year.
Hang Seng Index
Still, the rally has lost some momentum, driven by Beijing’s massive economic stimulus package in late September.
Looking ahead, China Renaissance’s Maynard said that while Hong Kong stocks may be out of the woods, he doesn’t see “any prospects for a Santa Claus rebound.” Markets remain “trapped and range-bound” as the economic stimulus measures announced by Beijing since September have had a lackluster effect.
