PwC: Hong Kong is World's Top IPO Market

Despite lingering uncertainty over the recovery of most of the world's powerful economies, Hong Kong has been able to secure top spot as the largest listing market by fund-raising size in 2009 (HK$243.7 billion).  At the "IPO Market Year End Review for 2009 and Outlook for 2010" press briefing early this week, PricewaterhouseCoopers (PwC) predicts that Hong Kong will continue to be among top rankings by more than HK$300 billion in 2010 through new IPOs.
The total funds raised through new IPOs in Hong Kong were three times more than the figure in 2008 (HK$66 billion).  The number of IPOs totalled 73 last year, increasing by 49% compared to 2008.  Among the 73 companies, 68 are on the Main Board (2008: 47) including 60 newly listed companies with funds raised (2008: 27), 4 introductions (2008: 2) and 4 transfers of listings from the GEM Board to the Main Board (2008: 18), and 5 on the GEM Board (2008: 2).  Excluding the transfer of listings from the GEM Board to the Main Board, the number of IPOs totalled 69 last year, increasing by 123% compared to 31 in 2008.
In 2009, the combined total IPO funds raised in Shanghai and Shenzhen stock exchanges were HK$210.9 billion (RMB185.6 billion), an increase of 79% (HK$117 billion/ RMB103.5 billion) from 2008.
"We are seeing the continuing of investment capital inflow into the Hong Kong capital market due to low interest rates and lack of investment channels for the investors.  There were also IPOs deferred from 2008 and completed in 2009.  As a result, the number of listings have picked up significantly during the second half of 2009 by 75% (55) compared to the first half of 2009 (18).  We believe listing activities will continue to be active given no further unexpected negative economic development," say Benson Wong, Assurance partner of PricewaterhouseCoopers.
The firm expects there will be 60 new listings in 2010 including 55 on the Main Board and 5 on the GEM Board, while the total capital raised may exceed HK$300 billion.  The forecasted new listings exclude any transfers from the GEM Board to the Main Board.
"In view of strong market liquidity, we note that many potential listing candidates have commenced their IPO preparation work.  On the other hand, with growth potential in mainland economy and a reasonable PE, investors are keen to take equity interests in companies with Chinese market.  Although we expect that there will be more international companies coming to list on Hong Kong Stock Exchange, Chinese companies will continue to dominate Hong Kong's new listings with key drivers being financial services, energy & utilities, industrial products, consumer goods and retail sectors in 2010," says Edmond Chan, Capital Markets Services Group partner of PricewaterhouseCoopers Hong Kong.


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