Hong Kong's IPO Market "Sluggish" While Pipeline Is "Steady" – KPMG

Editorial Staff 12 October 2023

Hong Kong's IPO Market

Initial public offerings, along with sales of businesses to private buyers, are drivers of liquidity that mint new HNW individuals. Wealth managers track such events in the hunt for new clients.

Hong Kong’s initial public offering market remains “sluggish” as slowing economic growth and high interest rates depress activity for these important liquidity events, figures from KPMG show.

Despite such figures, however, the accountancy firm said there is a “steady pipeline” of about 110 active IPO applicants, which means that the jurisdiction’s stock market should reclaim a top-five IPO ranking by the end of 2023.

IPOs, along with sales of firms to private buyers, and the exercise of share options and inheritance of business stakes, are important creators of liquidity that private bankers and wealth advisors track. 

The A-share stock exchanges maintain their position at the forefront of global IPO rankings, collectively accounting for about half of global proceeds and 20 per cent of the total number of deals in 2023 year-to-date. The NASDAQ Stock Exchange has ascended to the third place globally, having raised a total of $10.9 billion in proceeds thus far in 2023 following the IPO of a mega-sized semiconductor and software design company. Meanwhile, the New York Stock Exchange comfortably holds the fourth position, making a noticeable improvement compared with 2022 when neither exchange made it into the top five.

In the third quarter, the top five stock markets by IPO proceeds are, in descending order: Shanghai, Shenzhen, NASDAQ, NYSE, and National Stock Exchange of India. A year earlier, the rankings were Shanghai, Shenzhen, Korea, Frankfurt, and HKEX.

Total IPO activity around the world has dropped to a total of 1,004 deals in the year to end-September, down from 1,088 in Q3 2022, and way down from 1,776 in 2021, which rose from the pandemic-hit year of 943 in 2020.

“The global IPO landscape continues to face significant headwinds amidst ongoing challenges, and uncertainty is impacting investor sentiment,” Paul Lau, partner, head of capital markets and professional practice, KPMG, said. 

Among major IPOs this year was that of technology firm ARM in New York, netting a total of $5.22 billion – the largest IPO so far in 2023.

The Shanghai Stock Exchange and Shenzhen Stock Exchange raised $28.7 billion and $19.8 billion so far this year, representing a reduction of 42 per cent and 23 per cent respectively in funds raised compared with the first three quarters of 2022. 

Globally, there are around 820 active applicants for initial public offerings. 

The semiconductor industry and the broader industrial sector, along with TMT sector, account for nearly 70 per cent of the active IPO pipeline, the KPMG report said. 

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