Last year's IPO market in Hong Kong and mainland China was tough – with falls in the value and number of new entrants to the stock market. IPOs have been important creators of new millionaires – a fact that wealth managers note.

Hong Kong’s initial public offering market is set for a rebound in 2024 after falling in 2023, KPMG China predicted in a report. In mainland China, the firm said IPO activity will remain steady after slumping last year.

IPOs, along with sales of businesses, inheritance of family stakes and exercise of vested share options, are liquidity events that wealth managers and private banks track in their hunt for new clients.

The data adds to a sense that inheriting wealth, rather than creating it, is growing more important â€“ if only temporarily – in creating the world’s cohort of ultra-wealthy people, as suggested in a UBS study late last year. 

Globally, IPO markets raised $131.1 billion across 1,371 deals in 2023, sliding by 33 per cent and 10 per cent in total funds raised and the number of IPOs compared with 2022, respectively. Amid the overall decrease, the US stock exchanges were among the few to record improvements in their IPO activities, backed by the completion of the two largest IPO deals during the year.

Four out of the top 10 global IPOs were related to the semiconductor industry, as the explosive growth in generative AI tools has fuelled investor interest in advanced computing technologies, KPMG said.

"In 2023, global IPO activities encountered notable challenges due to a combination of factors, including geopolitical uncertainties, high interest rates, and a slower-than-expected economic recovery,” Paul Lau, partner, head of capital markets and professional practice, KPMG China, said. “While the effects of these challenges might endure into 2024, there is reason to believe that the worst is over, presenting an opportunity for IPO markets to stabilise soon."

Bounceback?
The Shanghai Stock Exchange and Shenzhen Stock Exchange raised RMB210.8 billion ($29.45 billion) and RMB148 billion, slumping 47 per cent and 32 per cent compared with 2022, respectvely. The A-share market was key for driving global IPO fundraising. However, it accounted for about 40 per cent of the total funds raised in 2023.

Hong Kong's IPO market concluded the year with 70 IPOs, raising a total of HK$46.3 billion ($5.92 billion), falling 21 per cent by value and 56 per cent by number of floats, compared with 2022, respectively.

"The Chinese mainland's post-Covid-19 economic recovery has fallen short of expectations. It is imperative for the Chinese government to support the positive development of its capital markets to effectively serve the real economy,” Louis Lau, partner, capital markets, KPMG China, said.

“Looking ahead to 2024, A-share IPO activities are expected to remain steady as regulators continue to support areas related to technology, innovation and sustainability. These measures will foster long-term and sustained growth of the A-share capital market,” Lau said.