Hong Kong, the world’s largest market for initial public offerings for six times in the past decade, might still reclaim its crown from the Nasdaq this year, analysts said.
Flotations in the city may have declined by 63 percent during the third quarter amid the weak economic environment but analysts believe that the worst is over. Mega listings to come in the next few months might allow the Hong Kong stock exchange to rebound in the coming quarter, and regain its top spot as the world’s largest IPO market.
«We believe the worst is over, as market sentiment has improved since September. Many companies will launch their IPOs before the end of December, before their current financial statements expire,» Kenny Ng Lai-yin, securities strategist at Everbright Sun Hung Kai, who was quoted in South China Morning Post.
A Chance To Climb Back
«Hong Kong will still have a chance to climb back to the top, as many listing hopefuls are preparing their IPOs for the fourth quarter,» said Gordon Tsui Luen-on, chairman of the Hong Kong Securities Association. Hong Kong was the third-largest IPO market in the first nine months this year, according to data provider Refinitiv.
It held the same ranking for the first half but was the top market last year. Experts expect Alibaba Group Holdings amongst those to boost the IPO market scene. The e-commerce giant is expected to raise $15 billion in secondary listing in Hong Kong.
«We have seen a very quiet summer, as many companies have held back IPOs. They want to wait for better valuations, when market sentiment improves,” added Ng.
Top Two Spots
The top two spots among IPO markets are Nasdaq and New York Stock Exchange. The Nasdaq ranked top, after Peloton Interactive’s $1.16 billion IPO last week. The US technology-focused stock market raised $22.5 billion in the first nine months this year, capturing 20.1 percent of the market globally.
The New York Stock Exchange, which ranked top in the first half, is in second place after raising $21.8 billion, or 19.4 percent of the market globally. The NYSE captured ride-hailing giant Uber Technologies’ IPO in May, which raised US$8.1 billion to become the year’s largest IPO worldwide.
Plunge In Total Funds Raised
The total funds raised through IPOs on the Hong Kong stock exchange’s main board and GEM, which is targeted at small and mid-sized issuers, stood at $7.13 billion in the July to September period, a decline of 63 percent from the $19.43 billion raised during the same period in 2018, based on data from Refinitiv.
The number of IPOs decreased to 22 from 52 a year earlier. The total funds raised also represent a two-year low for the third quarter.
IPO activity in the first nine-month period declined as well. Ninety-five listings on the main board and GEM raised US$16.29 billion, a decline of 49 percent from a year earlier.
