PricewaterhouseCoopers (PwC) noted Hong Kong’s IPO fund raising activities slowed down in the first half of this year. The total fund-raising amount reached HK$ 17.1 billion (about $2.2 billion) and is expected to contract by 92 percent year on year. Due to factors that contribute to increasing uncertainty, including the continued outbreak of COVID, geopolitical turmoil, and interest rate hikes across major central banks, PwC also cut its forecast for Hong Kong’s IPO volumes this year in half.
At a recent press conference, PwC said that only 22 new shares will be listed in the first half of 2022, 53 percent less than the number of listed companies in the first half of 2021. Most of the newly listed companies in 2022 are in retail, consumer goods, and services (41 percent), followed by 23 percent in financial services. In addition, 4 companies were listed in the form of introduction but only one switched from GEM of Hong Kong to the main board, but they did not raise any funds.
Due to uncertainty and market volatility, PwC cut its fund-raising forecast by half, from the estimate made at the start of the year, HK$350 billion (about $45.5 billion) to HK$400 billion (about $52 billion), to from HK$180 billion (about $23.4) to HK$200 billion (about $26 billion).
According to Eddie Wong, Partner at PwC in Hong Kong Capital Markets, Hong Kong’s IPO activity significantly slowed during the first half of the year in comparison to 2021, due to the fifth wave of COVID and the geopolitical situation in the periphery. He further said that many firms are still observing the situation due to uncertainty, and have postponed their fund-raising schedules.
However, Benson Wong, Partner at PwC in Hong Kong Corporate Clients, is optimistic about the future: “There are currently 180 companies queueing for listing, an increase in 30 companies from the beginning of this year, this demand for IPO shows listing in Hong Kong is still attractive.”
In the second half of this year, Benson Wong says he expects three or four IPOs that will raise more than HK$10 billion (about $1.3 billion), six to eight IPOs raising around HK$5 billion (about $650 million) to HK$10 billion (about $1.3 billion), and five to ten SPAC listings, including china concept stocks. He also said that whether the expected schedules will happen depends on the macro environment and market sentiment.
Due to the commencement of the Holding Foreign Companies Accountable Act, China Concept stocks began to return to Hong Kong’s exchange. A research report released by CICC’s official WeChat account on May 16 said that 27 of the 271 China Concept Stocks listed in the United States have returned to Hong Kong as of May, and 42 stocks are eligible to return to Hong Kong in the next three to five years.
Dr. Li Songyun, an economics expert, told The Epoch Times that mainland’s companies became an important pillar in Hong Kong’s IPO capital markets in the past 3 years, but this did not make Hong Kong’s market more prosperous. In fact, China Concept Stocks’ huge losses, due to the CCP’s regulatory policies, is an important reason for the downturn of the market.
