Hong Kong’s booming IPO market poised for lift from China curbs

The tailwinds lifting the Hong Kong bourse’s prospects are blowing from east and west: China is applying heavy scrutiny on overseas listings as well as its homegrown exchanges, sending companies to consider going public in the Asian financial hub.

Logistics and delivery firm Lalamove is the latest weighing moving its US initial public offering plan to Hong Kong, following Beijing’s pledge to tighten cybersecurity oversight that could block start-ups from holding first-time share sales outside the country. China’s stricter screening for its Nasdaq-style STAR board has also prompted companies such as Neusoft Medical Systems to switch to Hong Kong.

“The bulk of offshore listings are still happening in Hong Kong, so there might be a trigger for more listings,” said David Chin, head of investment banking for Asia Pacific at UBS Group AG.

The prospect of capturing re-routed activity helped make Hong Kong Exchanges & Clearing the world’s top-performing major bourse this month. The stock has gained nearly 10% in July to beat 11 of its peers with a market value of US$10 billion ($13.5 billion) and above, according to data compiled by Bloomberg.

It is not just Chinese IPO hopefuls that are looking to the city to raise funds. Hong Kong’s financing flexibility and the availability of offshore capital are drawing many A-share listed companies to seek a second listing there, according to Tucker Highfield, co-head of Asia Pacific equity capital markets at Bank of America Corp. —