Hong Kong has had more than its fair share of negative headlines over the past year, but as far as its IPO market goes, the story is far more robust and likely to stay that way this year, according to one of the world's top accountancy and professional services firms.

Hong Kong’s market for initial public offerings could rack a total of 180 floats this year, raising between HK$230 billion ($29.5 billion) and HK$260 billion this year, according to PricewaterhouseCoopers. If the prediction turns out to be true, it will show how the market has shrugged aside domestic political problems.

More new economy enterprises are expected to seek listing on HKEX in view of the listing regulations reform, PwC said in a statement late last week. PwC said the H-share full circulation programme will help attract more Chinese enterprises to list on HKEX; it will also help to increase H-shares circulation volume in the market. Judging by the number of existing listing application submissions, listings of overseas companies in Hong Kong are expected to remain active in 2020, with the possibility of increasing numbers compared with 2019.

There were 184 new listings in 2019 in terms of the number of IPOs, of which 169 were Main Board listings, mostly comprising retail, consumer goods and services companies. The number of listings increased by 26 compared with 2018. Total funds raised by IPOs in 2019 reached HK$315.5 billion, marking an increase of 10 per cent from the previous year.

IPOs, along with mergers and acquisitions, are major drivers for creating new high net worth individuals; they are an indicator of how successful business founders are in taking firms to the next stage, either to raise fresh capital, or exit a business by taking it public, or changing how they compensate employees and other stakeholders. (To see a recent article about global M&A activity, see here.)

However, the number of GEM Board (Growth Enterprise Market) new listed companies in 2019 fell compared with the number of listings in 2018. Fifteen companies were listed on the GEM Board in 2019, a decrease of 80 per cent compared with year-on-year. Additionally, there were two companies listed by introduction on the Main Board and 20 GEM Board listing companies switched to the Main Board listing without any funds being raised.

“After the successes of 2018, 2019 has continued to be another exciting year with great results for Hong Kong IPO market. Once again, Hong Kong secured the global crown as world’s number one fundraising hub and has continued to be in the top three global IPO fundraising markets position for the seventh year, with total funds raised of HK$315.5 billion,” Eddie Wong, PwC Hong Kong Capital Markets Services Partner said. 

Benson Wong, PwC Hong Kong Entrepreneur Group leader said: “Riding on the success of listing regulations reform and corporate development funds are in great demand, we are still cautiously optimistic about the Hong Kong IPO market outlook for 2020 despite global geopolitical and economic uncertainties, such as Brexit, interest rate movements and China-US trade friction etc. In the long run, we are very confident that Hong Kong will continue to be the best financing platform in the region as we predict that more new economy enterprises are expected to be listed on HKEX. This will help Hong Kong continue to establish its position as the most important Asian IPO fundraising hub.”

Looking at mainland China markets, since the launch of the Science and Technology Innovation Board (STAR Market), it has raised RMB82.4 billion ($11.83 billion) for 70 high-tech innovative companies. In 2019, there were 201 IPOs on four Main Boards in the Mainland, with a total of RMB253.3 billion funds raised.