Hong Kong reclaims position among top five global IPO venues, says KPMG

Stock market surges on government stimulus, set to boost Hong Kong IPO activities

03 October 2024

3 min read

3 October 2024, Hong Kong (SAR), China ("Hong Kong") – According to KPMG's latest Chinese Mainland and Hong Kong IPO Markets 2024 Q3 review, Hong Kong has regained its position among the top five global IPO venues. This resurgence was largely driven by the listing of a major Chinese home appliance manufacturer during the quarter - the largest IPO in Hong Kong since 2022.

As of the third quarter of 2024, global IPO markets raised a total of USD 83.3 billion through 851 deals, reflecting declines of 21% in funds raised and 15% in the number of deals compared to the same period last year. US stock exchanges continued to lead globally in terms of funds raised, accounting for one-third of global IPO proceeds. The National Stock Exchange of India ranked third, while the Hong Kong Stock Exchange and Shanghai Stock Exchange ranked fourth and fifth respectively.

The Chinese mainland and Hong Kong stock markets have recently experienced their strongest weekly performances, fuelled by the government's newly announced stimulus package. The strategic initiative is expected to enhance liquidity inflows, which could significantly boost the number of large IPOs in Hong Kong for the remainder of 2024 and beyond. As a result, Hong Kong is well-positioned to strengthen its standing in the global IPO rankings, showcasing its resilience and appeal as a leading fundraising hub.

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

The recent interest rate cut by the US Federal Reserve is likely to have a positive ripple effect on global IPO markets by boosting stock valuations and improving overall market sentiment. However, companies looking to go public should remain cautious due to ongoing macroeconomic uncertainties. While the current market conditions remain mixed, we expect the rate cut to gradually encourage further listings as companies regain confidence in market stability.

In the A-share market, REIT listings have shown significant growth. Year-to-date, 16 REITs have raised a total of RMB 38.9 billion – a record for both the number of listings and funds raised since the first wave of listings in 2021. Notably, 8 of the top 10 largest A-share IPOs were REITs, with portfolios mainly comprising shopping malls and department stores. This surge follows the CSRC's expansion of the REIT program in October 2023 to include 'consumption-related infrastructure projects', thereby broadening investment options for market participants.

However, overall A-share IPO activity has declined, with exchanges raising RMB 86.8 billion across 85 deals, representing a 74% decrease in funds raised and a 68% drop in deal volume compared to the same period last year. The Technology, Media, and Telecom (TMT) and Industrials sectors continued to dominate, accounting for 64% of the active pipeline.

Louis Lau, Partner, Head of Hong Kong Capital Markets Group, KPMG China, says:

Despite a slowdown in A-share IPO activity, the recent reforms in the STAR market underscore China's commitment to driving growth in high-tech industries. These reforms, particularly those enhancing M&A flexibility and providing stronger support for early-stage companies, aim to foster a more dynamic environment for technology-driven firms. We expect that, over time, these measures will attract more innovative companies, increasing investor interest and supporting sustained growth.

Hong Kong IPO activities showed signs of recovery in the third quarter of 2024, raising HKD 55.6 billion through 45 IPOs, representing a 123% increase in funds raised and a 2% rise in the number of listings compared to the first three quarters of 2023. The consumer markets sector led in terms of funds raised, attributable to the listing of a large Chinese home appliance maker, which alone attracted HKD 35.7 billion – accounting for 64% of the total funds raised in Hong Kong year-to-date.

More than a year after the implementation of the listing regime for Specialist Technology Companies (Chapter 18C), the city witnessed another listing under this regime during the quarter. In response to market conditions, The Hong Kong Stock Exchange provisionally relaxed the listing requirements for Specialist Technologies Companies, a move designed to maintain the city's appeal as a competitive capital market hub.

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

Hong Kong's recent completion of its largest IPO in the last three years signals the return of confidence and interests of investors. The agility of listing authorities, combined with the recent interest rate cut and Chinese government's stimulus measures, have further supported the market recovery. Looking ahead, these favourable conditions are expected to drive a sustained increase in IPO activity, positioning Hong Kong as a hub for high-growth companies.

-Ends-

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