PwC predicts that the Hong Kong IPO market will rebound in 2024

View this page in: 繁體中文版

• Chapter 18C, which has had its first listing, will help connect specialist technology companies with international funds and promote the development of the entire technology industry.
• Market focus in the second half of the year will be on industries such as TMT, AI and retail, consumer goods & services.

Hong Kong, 2 July 2024 – As a leading international financial centre, Hong Kong has been adversely affected by global political and economic uncertainties in recent years. Inflation has taken longer than expected to slow in the past six months, causing interest rates to remain high and further impacting the Hong Kong IPO market. In the first half of 2024, investment sentiment has remained cautious and the size of IPOs has been generally modest. In the first half of the year, total funds raised on the Hong Kong market reach HK$13.1 billion – a 27% drop year-on-year.

There were 30 new listings in Hong Kong in the first half of 2024, including 29 companies listed through the Main Board and one GEM Board listing – a decrease of 9% compared to the first half of 2023. The main sectors for the Main Board were information technology & telecommunications (41%), industrials and materials (21%), and retail, consumer goods & services (21%).

The substantial demand for corporate financing continues to be a major driving force. With the end of the interest rate hike cycle, global capital from Europe, the United States, and the Middle East is expected to return to Asia, stimulated by the major central banks starting to cut interest rates. This influx of capital will increase market liquidity and valuations. As a result, PwC is cautiously optimistic. Hong Kong's IPO market has shown signs of gradual recovery in the second quarter of 2024. Currently, over 100 companies (including a number of large listings) have submitted listing applications to the Hong Kong Stock Exchange, some of which have been successfully registered with the China Securities Regulatory Commission. If market sentiment continues to improve in the second half of 2024, we expect to see some large (HK$5 bn+) IPOs in Hong Kong. PwC forecasts that around 80 companies will list in Hong Kong in 2024 and achieve fund raising of HK$70-80 billion. Market focus in the second half of the year will be on industries such as TMT, AI and retail, consumer goods & services.

Eddie Wong, PwC Hong Kong Capital Market Leader, said: “With interest rates expected to fall in the second half of the year, Hong Kong's capital markets are poised for a resurgence. The anticipated listing of Chinese concept stocks and technology companies, especially in the form of specialist technology companies, is expected to contribute to stability and confidence in the city's capital market. In particular, the implementation of the new Chapter 18C listing regime will play a pivotal role, helping to connect these high-growth technology companies with investors and bringing new opportunities to both corporates and the Hong Kong stock market. The first company under the Chapter 18C listing regime successfully listed in Hong Kong recently. It is anticipated to further promote the development of the entire technology industry ecosystem.”

Eddie Wong said, “With Chinese mainland companies establishing or expanding their business in the city, as well as growing demand from international capital for RMB-denominated assets, the Hong Kong Stock Exchange has the opportunity to facilitate the listing of mainland Chinese companies in Hong Kong by strengthening cooperation with Chinese mainland regulators. Hong Kong is strategically positioned and should continue to leverage its role as the ‘super connector’ between Chinese mainland and global financial markets. Given greater interconnection with the Chinese mainland, the types of securities that can be traded through the Hong Kong and Mainland Stock Connects should be further broadened. This will help promote Hong Kong as a premier centre for RMB asset management and solidify its position as the global offshore RMB business hub.”

The HKSAR Government and regulatory authorities continue to take strategic steps to expand the city’s global reach. This is expected to attract more Middle Eastern and ASEAN-listed companies to list in Hong Kong. The range of overseas stock exchanges recognised by the Hong Kong Stock Exchange may expand, thus allowing more companies to come to Hong Kong for secondary listings. This will promote cross-border listings and foster regional financial cooperation. Looking ahead, PwC believes that providing Hong Kong investors with a wider range of investment opportunities and further enriching the product offerings of the Hong Kong Exchange will help consolidate Hong Kong’s role as a leading financial centre.