Listing activity in HK set to improve amid strong pipeline, Deloitte says

Initial public offerings in Hong Kong are expected to improve on the back of a strong pipeline of candidates, while mainland firms are also switching their share sales from other venues, according to Deloitte.

“We have witnessed an increase in listing applications, in particular from the artificial intelligence, life science and healthcare industries, which are important sectors,” said Edward Au, managing partner for the southern region at Deloitte China.

Hong Kong was a top choice for listings due to its global financial centre status and appealing market reforms, he added.

While many potential issuers were waiting for a rebound in market valuations, certain companies were committed to listing in Hong Kong based on pressing fundraising needs to support growth, Au said after releasing the firm’s stock market outlook yesterday.

Hong Kong’s stock exchange could host 80 listings this year with estimated proceeds of HK$100 billion, according to a forecast by Deloitte China.

Stronger measures taken by Beijing to recharge the mainland economy and possible interest rate cuts in the United States later this year were supporting factors, it added.

The city made a sluggish start this year, with 12 deals generating HK$4.7 billion in proceeds, a 30 per cent drop from a year earlier.

“The Hong Kong market started to show more positive signs in March with more new listings and a better market turnover,” said Robert Lui, southern region Hong Kong offering services leader of Deloitte’s capital market services group.

“Turnover and valuation, which depend on market liquidity, remained low, resulting in a slow performance [last quarter].”

In the mainland market, A-share offerings could remain depressed, given geopolitical uncertainties, weak investor sentiment and heightened scrutiny since the appointment of a new head at the China Securities Regulatory Commission.

Stock exchanges on the mainland managed 30 listings in the first quarter, which generated 23.6 billion yuan (HK$25.5 billion) of proceeds, a 64 per cent slide from a year earlier, Deloitte said in the report.

The Hong Kong market started to show more positive signs in March with more new listings

ROBERT LUI, DELOITTE

The bourses in Shanghai, Shenzhen and Beijing were projected to generate as much as 166 billion yuan from 155 listings this year, it said.

The heightened scrutiny over flotations in the A-share market had resulted in a drop in both the deal number and proceeds raised across the five major listing boards in the three cities in the past quarter, Deloitte said.

The Shanghai Stock Exchange, which has raised 14.8 billion yuan in the past quarter, ranked among the top five venues globally.

Its performance was helped by several strong manufacturing and technology, media and telecommunications companies, Deloitte said.