Around 100 companies are expected to list in the Hong Kong stock market this year, raising an anticipated total proceeds of HK$230 billion (US$29 billion), although economic uncertainty, political and policy changes and competition from other overseas bourses will impose strong challenges to the initial public offering (IPO) market of Hong Kong, according to professional services firm Deloitte Touch Tomatsu.

"The Hong Kong market experienced the best performance in 10 years during the first half of 2011, but the IPO market took a U-turn in the second half of the year mainly because of the exacerbation of the Greek debt crisis and the downgrade of the U.S.’ credit rating," says Edward Au, National Co-Leader of Public Offering Group of Deloitte China.

Au adds that the corporate liquidity problems in Wenzhou, the bankruptcy filing of MF Global and the potential economic contraction in Europe also weighted heavily on the market sentiment.

On the back of weakened sentiment, around 40 planned IPOs were believed to have been put on the shelf in 2011, the highest number over a decade. Market caution was also evidenced by the fact that 75 percent of the IPOs were priced below the mid point of the indicative range.

There was also a significant downsizing for IPOs that were re-launched after the initial delay, with the heaviest reduction of up to 63 percent from the originally planned.

Overall, Hong Kong recorded 90 new listings in 2011, down 12 percent year-on-year and total fund raised reached HK$271.4 billion, down 40 percent from a year earlier.

Despite the reduction, Hong Kong remained as the top IPO location globally in 2011.