Here is Why Hong Kong’s Listing Volume is Sinking
According to statistics, the volume of new listings in Hong Kong fell by 90% to a nine-year low this year; meantime, China’s steep economic downturn and regulatory push cast a shadow over the prospects as a destination for initial public offerings.
The lack of share listings in Hong Kong is bad news for investment banks; they rely on equity capital market transactions for around a third of their income in the area; moreover, the Chinese-ruled territory’s standing as a worldwide financial center. According to Refinitiv statistics, only $2.1 billion has been raised this year through IPOs and secondary listings in Asia’s most popular fundraising venue; last year, it was $20.7 billion at the same time.
Businesses Fall, One After the Other
JD (NASDAQ: JD) Technology is the fintech unit of Chinese e-commerce giant JD.Com; it is the latest business to postpone a $2 billion Hong Kong IPO; the reason behind this is a lack of domestic regulatory permission. Moreover, Full Truck Alliance Co Ltd, China’s ‘Uber (NYSE: UBER) for trucks,’ has halted plans to raise $1 billion in a Hong Kong IPO this year; the reason behind this is that the cybersecurity regulator has not released the conclusions of an investigation into the firm.
According to bankers and lawyers, more Chinese firms should withdraw or delay files for listing this year due to weaker secondary markets; hence, it will impact investor interest in fresh share offers.
The Hang Seng Index in Hong Kong is down 14.1% year to date in 2022; the MSCI’s broadest index of Asia-Pacific stocks outside Japan is down 14.4%.
“With the markets being so volatile, any doubts regarding a listing candidate’s prospects would likely force them to be more cautious,” said Sumeet Singh, an Aequitas Research analyst and Smartkarma contributor.
“On top of global turbulence, China’s COVID lockdowns and IT regulations aren’t helping stock markets.”
Furthermore, Hong Kong Exchanges and Clearing (HKEX) has dropped from third to tenth position in the global listing league tables this year. “We are optimistic in the long-term attractiveness of Hong Kong’s markets,” a HKEX spokesperson stated.
