Signs of Hong Kong IPO activity picking up in the second half of 2024, says KPMG

Hong Kong debuts first listing under Specialist Technology Company listing

18 June 2024

3 min read

18 June 2024, Hong Kong (SAR), China ("Hong Kong") – Hong Kong debuted its first listing under the listing regime for Specialist Technology Companies (Chapter 18C), as the city continues to support and embrace innovative technologies, according to KPMG's latest Chinese Mainland and Hong Kong IPO Markets 2024 mid-year review. Despite a slow start to 2024, a number of positive signs are pointing towards a pick-up in Hong Kong Initial Public Offering (IPO) activities for the latter half of 2024.

In the first half of 2024, global IPO markets raised a total of USD 51.6 billion across 513 deals. This marked a decline of approximately 20% in both funds and deal volume, compared to the first half of 2023. Despite the overall downturn, the US IPO markets showed promising signs. However, these were counterbalanced by a slowdown in the Asia Pacific region. The New York Stock Exchange and NASDAQ ascended to the top two positions among global IPOs in terms of total funds raised, while the Shanghai Stock Exchange and Shenzhen Stock Exchange slipped to fourth and fifth place respectively. The three largest IPOs were hosted by European stock exchanges, each raising between USD 2.4 billion to USD 2.8 billion.

Paul Lau, Partner, Head of Capital Markets and Professional Practice, KPMG China, says:

Global IPO activities have been clouded by increased uncertainty, largely due to geopolitical conflicts and an unprecedented number of elections worldwide. Nonetheless, certain IPO markets are beginning to show signs of resurgence. This presents a window of opportunity for companies to revive their IPO plans and for investors to reconsider the weight of IPOs in their investment portfolio.

The A-share stock exchanges collectively raised a combined RMB 56.5 billion across 52 deals, marking a decrease of approximately 75% and 70% in funds and deal volume, respectively, compared to the first half of 2023. The current slowdown is likely influenced by the China Securities Regulatory Commission's (CSRC) strategy to prioritise the quality of new listings over the quantity. However, this approach while contributing to the current slowdown, is also expected to bolster investor confidence and foster the long-term stability and growth of the A-share market.

In the first half of 2024, Infrastructure / Real Estate emerged as the largest sector in terms of funds raised. This was primarily due to five of the top 10 listings being Real Estate Investment Trusts (REITs) with a focus on logistic centres, shopping centres and rental accommodations. The TMT and industrial markets ranked second and third, respectively, as companies involved in technological innovation and advanced manufacturing remained a key focus for both regulators and investors in the A-share market.

Louis Lau, Partner, Capital Markets, KPMG China, says:

In the first half of 2024, IPO activities in the A-share market slowed down amid the tightening regulatory environment. Among the companies listed in this period, there was a noticeable increase in the representation of companies linked to the semiconductor and robotics industry, underscoring the steady support for the growth of these crucial industries. Looking ahead to the remainder of 2024, we expect the TMT and industrials sectors will continue to be the key drivers of the IPO market.

In the first half of 2024, the Hong Kong IPO market raised a total of HKD 11.6 billion across 27 deals, representing a decrease of 35% and 15% in funds and deal volume, respectively, compared to the first half of 2023. The TMT, consumer markets and healthcare / life sciences sectors once again led the market in terms of total funds raised, recording HKD 4.6 billion, HKD 2.8 billion and HKD 1.5 billion, respectively.

During the quarter, Hong Kong welcomed its first IPO under Chapter 18C, featuring a company equipped with an AI-powered drug research platform. The city has a long-standing commitment to fostering innovation and technology, and the listing of technologically advanced companies in Hong Kong would further enhance the city's status as a regional innovation hub.

Meanwhile, the CSRC recently introduced five measures, which includes encouraging leading enterprises from the Chinese Mainland to list in Chinese Hong Kong. Other measures aim to enhance the mutual accessibility between the capital markets of the Chinese Mainland and Hong Kong, in order to further strengthen the connectivity and competitiveness of both capital markets.

Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG China, says:

There is newfound positivity in the Hong Kong IPO market as evidenced by the surge in IPO applicants. This upsurge has been supported by the CSRC's five measures and A-share applicants switching their IPO plans to Hong Kong. In light of this, we maintain a positive outlook for IPO activities to pick up in the second half of 2024.

Furthermore, Hong Kong and the Middle East have maintained their active dialogues in recent months, aimed at strengthening cross-border investment activities. With the upward trajectory of IPO activities, Hong Kong is poised to become an increasingly attractive destination for potential overseas listings from Middle Eastern companies in the foreseeable future.

-Ends-

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