Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Hong Kong new listings volume sinks to 9-year low on China slowdown

Stock Markets May 19, 2022 04:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Stock Exchange of Hong Kong (HKEX) logo in Beijing, China September 4, 2020. REUTERS/Tingshu Wang

By Scott Murdoch

HONG KONG (Reuters) - Hong Kong's new listings volume plunged 90% to a nine-year low this year, data showed, as China's sharp economic slowdown and its regulatory drive cast a long shadow over the city's prospects as a destination for initial public offerings (IPOs).

The drying up of share listings in Hong Kong bodes ill for investment banks, who make about a third of their revenue in the region from equity capital market deals, and for the Chinese-ruled territory's status as a global financial hub.

Only $2.1 billion has been raised this year via IPOs and secondary listings in Asia's most popular fundraising venue compared to $20.7 billion by the same time last year, according to Refinitiv data, the slowest start to a year since 2013.

"One of the reasons for the IPO market in Hong Kong falling so sharply is the deteriorating financial performance for most of the applicants in the previous financial year, and it is possible that will the case for the first half of the current year too," said Frank Bi, partner at law firm Ashurst.

"Such adverse change effectively delays the application timetable."

JD (NASDAQ:JD) Technology, the fintech arm of Chinese e-commerce company JD.Com, is the latest to delay an up to $2 billion Hong Kong IPO because domestic regulatory approval for the deal has not been forthcoming, Reuters reported last week.

And plans by Full Truck Alliance Co Ltd, China's 'Uber (NYSE:UBER) for trucks', to raise $1 billion in a Hong Kong listing this year have been paused as the cybersecurity regulator has yet to announce findings of a probe into the company.

More Chinese companies are expected to either withdraw or delay filings for listing this year as weaker secondary markets are also weighing on investor appetite for new equity offerings, bankers and lawyers said.

Hong Kong's Hang Seng Index is down 14.1% year-to- date in 2022, while the MSCI's broadest index of Asia-Pacific shares outside Japan is off 14.4%.

"From the investors' point of view as well, with the markets being unforgiving, any doubts about a listing candidate's prospects will likely lead to them being more cautious," said Sumeet Singh, Aequitas Research analyst who publishes on Smartkarma.

"On top of the global volatility, China's COVID lockdowns and tech regulations aren't very helpful for capital markets."

In the global listing league tables, bourse operator Hong Kong Exchanges and Clearing's (HKEX) ranking has dropped to 10th this year from third last year.

"We are confident in the long-term attractiveness of Hong Kong’s markets and are pleased to see a strong pipeline of over 170 active listing applications," said an HKEX spokesperson.

FEE DROP

The crumbling listing activity could pose a challenge to Hong Kong's incoming Chief Executive John Lee who has promised to maintain the city's status as a global financial centre.

It also presents a major problem for banks - they earned $33 million in fees for working on Hong Kong IPOs this year, compared to $221 million at the same time in 2021, according to Dealogic data.

Some were optimistic, though, given the city's strategic importance.

Although the Hong Kong market has been "very wobbly", the city's IPO prospects should bounce back once the volatility subsides as it's an important "venue that bridges China with the rest of the world", said Li He, a partner at law firm Davis Polk.

Hong Kong new listings volume sinks to 9-year low on China slowdown
 

Related Articles

Asian Stocks Down, Fears of Slowing Economy Linger
Asian Stocks Down, Fears of Slowing Economy Linger By Investing.com - Jul 05, 2022

By Zhang Mengying Investing.com – Asia Pacific stocks were up on Wednesday morning as fears of an economic downturn lingered in the financial market. Japan’s Nikkei 225 fell 1.32%...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email