- Hong Kong's IPO market remained weak in the third quarter of 2023, according to Big Four companies.
- At the beginning of the year, Big Four analysts expected Hong Kong's IPO market to recover in the second half of the year.
- The recent IPO debut of J&T Express, an Indonesian logistics services provider backed by Tencent, was lackluster. Shares opened flat and subsequently fell 1.33% in Friday morning trading.
Hong Kong's initial public listing market continues to decline even as Analysts predicted a market rebound. in the second half of the year.
"The Hong Kong market has not recovered as much as we would like," Irene Chu, partner at KPMG China, told CNBC.
In the first three quarters of the year, Hong Kong's IPO market concluded 44 listings and raised HK$24.6 billion ($3.14 billion), according to KPMG. This represented a 65% drop in the number of deals and a 15% drop in revenue, respectively, compared to the same period last year, the firm said.
Hong Kong's stock market was among the worst performers last year, losing 15% in 2022 for the third consecutive year of falls. In October, the Hang Seng Index and the Hang Seng Tech Index fell to its lowest levels since November 2022.
"The Hong Kong market is already in [a] very low point [compared to] the good old days in 2020 or before that. So the general sentiment has not yet recovered. We can't expect the IPO market to recover quickly or be comparable to the old days," said Ringo Choi, Asia-Pacific IPO leader at EY.
A June report from EY and a mid-year review released by KPMG China predicted that Hong Kong's IPO market could recover in the second half of 2023.
On October 27, the J&T Express market debut, an Indonesian logistics services provider backed by Tencent, had a mediocre performance. Shares opened flat and subsequently finished down 1.33%.
J&T, the second-largest listing in Hong Kong this year, originally hoped to raise at least $1 billion in the listing, but cut the target in half due to weak investor sentiment, according to Reuters.
"The Hong Kong stock market remained weak in the third quarter of 2023, as did equity valuations, due to macroeconomic developments, particularly around interest rate hikes in the United States. Many IPO candidates continue to wait for a change in market valuations as they prepare and plan their offerings," he said Deloitte in a September report.
Hong Kong's biggest IPO this year, Chinese liquor maker ZJLD Groupplummeted 18% in his commercial debut on April 27.
The two biggest IPOs in the Asian financial hub last year also fell in their stock market debuts. Chinese electric vehicle manufacturer. Zhejiang Jump Engine fell 34%, while real estate services provider Onewo fell almost 7%.
"Five of the last nine major HKEx IPOs had flat debuts. At the latest closing prices, all major HKEx IPOs since 2022 are trading below IPO prices," said Arun George, co-founder and analyst at Global Equity Research in an October report. .26 report published in Smartkarmaan investment research network.
Greater China's weak recovery
Hong Kong is a special administrative region of China, which has faced a disappointing post-Covid economic recovery. In October, the The International Monetary Fund lowered its growth forecast for China 5% this year and 4.2% in 2024.
The Shanghai and Shenzhen stock exchanges raised $28.7 billion and $19.8 billion in funds respectively from January to October 9, falling 42% and 23% compared with the first three quarters of last year. KPMG reported.
But analysts say the global economy outside China is struggling to recover. "It's not just about China. The recovery of the global economy is also quite challenging. The overall economic recovery takes a little time to really recover," said KPMG China's Chu.
In the first three quarters of this year, there were 968 IPOs worldwide, raising $101.2 billion in capital, a year-on-year decline of 5% and 32%, respectively, he said. Hey.
In a bid to boost the market, the Hong Kong Stock Exchange in September proposed measures increase the attractiveness for small and medium-sized companies with high growth potential to go public.
In August, the The government announced a task force. "increase" stock market liquidity to boost the development of its capital market.
"The dynamic initiatives, coupled with the continued improvement of its listing regime by HKEX, are crucial to strengthening Hong Kong's diverse and multi-layered capital markets, a key to maintaining Hong Kong's competitiveness as an international financial center of first level," he said KPMG.
