Mainland China and Hong Kong 2018 IPO Review

Mainland China and Hong Kong 2018 IPO Review

Review of the mainland China and Hong Kong IPO markets for 2018, and outlook for 2019

digital data abstract

KPMG analysis finds that Hong Kong is expected to regain its No. 1 position as the top destination for initial public offerings (IPOs) with estimated fundraising of around HKD300 billion (USD38.4 billion) in 2018. A strong IPO pipelines and continued interest from ‘new economy’ companies will allow Hong Kong to raise over HKD200 billion from 200 new listings in 2019.

The strong performance in 2018 is driven mainly by three mega-sized deals from the technology, media and telecom (TMT) sector. The influx of ‘new economy’ companies is set to boost the total number of new listings to hit a record 208. In 2018, 36 IPOs came from the ‘new economy’ sector, accounting for more than a quarter of 133 IPOs recorded in the Main Board.

The new listing regime for companies from emerging and innovative sectors has successfully generated significant interest from new economy companies globally and helped transform Hong Kong into a hub for the ‘new economy’.

Meanwhile, the A-share market in Mainland China sees slowing IPO activities amid a decline in listing approvals. KPMG forecasts that the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) will raise a combined RMB138 billion (USD20 billion) from 105 IPOs in 2018. Despite the slowing market, average deal size has more than doubled from RMB 0.53 billion to RMB 1.31 billion.

Small and medium-sized companies from the industrials and TMT sectors are expected to make up a majority of the A-share IPOs. The upcoming establishment of a new high-tech board in Shanghai is set to further stimulate the market. It allow for greater inclusion and support of high-tech and innovative companies, and provide a platform to experiment with a registration-based system for IPOs.

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