Commentary: Hong Kong’s IPO market lags behind other exchanges

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But this year has been anything but normal and confidence is beginning to wane. PwC, for one, began the year forecasting annual IPO fundraising could total as much as US$50 billion but in its handover note slashed this estimate to about US$25 billion, around half of last year’s total.

Even that downsized target would require a 964 per cent rise in deal value from the first half, which would mark the biggest such leap in 13 years.

Reforms in January allowing special-purpose acquisition vehicles to sell shares in Hong Kong came after global interest in special purpose acquisition company (SPAC) listings was drying up, and only one has since bothered to go public in the territory.

And despite HKEX’s plans for new offices in the United States and Europe to promote itself as a fundraising destination, listings from outside the region are a tough sell, too. This year’s only debut from outside greater China came courtesy of Italian yachtmaker Ferretti, whose stock has tumbled nearly 15 per cent from the price of its IPO in March.

When pressed, HKEX chief executive Nicolas Aguzin told the FT in May that the exchange had a “strong” pipeline of more than 200 companies waiting for market conditions to improve before going public: “We’ve never had a downturn that lasts forever – they will list.” But Aguzin has been pointing to that same clutch of companies in the queue for almost a year.

If a thaw is to come, new listings are more likely to hail from the strategic sectors that Beijing supports. As with so much in Hong Kong, the city’s IPO market must increasingly take its direction from the mainland.

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