Mainland companies' listings help financial hub to regain title in 2018
Companies from the Chinese mainland are driving a bumper year for Hong Kong IPOs in 2018, helping the city to regain its much-coveted title as the world's leading venue for going public.
KPMG forecast a total of 208 firms will raise as much as HK$286.6 billion ($36.6 billion) this year, according to its annual IPO review released in Hong Kong on Tuesday.
That means Hong Kong has topped the global rankings for IPO volumes this year, after New York took the title from it last year. Previously, the Asian financial hub had held the title for two consecutive years.
More than 70 percent of the funds raised come from mainland enterprises, many of which chose to make their market debuts in Hong Kong to take advantage of the city's groundbreaking listing rule changes.
Since Hong Kong Exchanges and Clearing Ltd－the operator of Asia's third-largest stock exchange－allowed technology firms with dual class share structures to go public in the city this April, a total of 22 new economy companies from the mainland have listed in Hong Kong, said Chen Mingzhi, assistant vice-president of mainland development at HKEx, on Monday in Hong Kong.
These headline-making tech floats include online healthcare platform Ping An Healthcare and Technology's $1.1 billion IPO, smartphone maker Xiaomi's $4.7 billion listing, and the $4.2 billion offering from food delivery service platform Meituan-Dianping.
"Chinese mainland enterprises have become the backbone for Hong Kong's IPO market," Chen said, adding their daily average trading volumes contribute 80 percent of the market total.
The Hong Kong stock exchange, together with its United States counterparts, are expected to remain strong in the coming year, retaining their allure as go-to destinations for promising technology superstars from the mainland, according to a recent report from law firm Baker McKenzie.
As Uber, Lyft and Airbnb lead the pack of multibillion-dollar Silicon Valley companies readying IPOs in the US next year, Hong Kong is in for a bumpy ride to keep its IPO crown, said Edward Au, Hong Kong-based co-leader of the national public offering group at Deloitte.
But, Au said he remains optimistic that the region can secure a place among the top three in the global IPO league table next year.
With more than 200 firms lining up for floats in Hong Kong, IPOs are set to rake in as much as HK$230 billion over the coming 12 months.
Companies from the tech, media and telecommunication sector will continue to be the major driving force, KPMG forecast.