According to an Ernst Young (EY) report, the chances of the Hong Kong Stock Exchange entering the top three of global fundraisers this year are relatively small, but being ranked in top five can still be a possibility.
In the report, only 20 companies were listed in the first half of 2022 in Hong Kong, taking the annual decrease down by 56 percent. The amount of financing was HK$17.7 billion (US$2.25 billion), indicating an annual decrease of 92 percent. The number of listings and financing dropped to number 9 and 10 respectively.
The full year forecast is also lowered. The scale of Hong Kong New Stock Financing this year is expected to drop to HK$220 Billion (US$28.03 billion) from the previously expected HK$350 billion (US$44.59 billion).
According to EY, in addition to the sharp reduction in the amount of funds raised in the Hong Kong IPO market during the first two quarters of 2022, the performance of listed IPOs was unsatisfactory as well. Over 60 percent of the new shares are issued at a fixed floor price or below floor price, with only five percent of the new shares issued sitting at a higher price.
During the first half of 2022, 44 percent of IPOs dropped below the listing price on the first day, which is higher from the 40 percent in the same period in 2021. The over subscription multipliers also plunged sharply, with an average subscription multiple of the Main Board reaching only 4.1, resulting in its annual decrease of 99 percent.
EY’s report also pointed out that with the relaxation of the listing system on the Hong Kong Stocks Exchange, dual major listings have gradually become a new trend, with Chinese concept stocks listing in Hong Kong.
EY expects Hong Kong stocks to pick up in the second half of 2022.
