Hong Kong races past New York to return as top IPO market for first time in four years

Hong Kong’s performance this year puts it far ahead of second-place New York, which has a 9.8 per cent market share with US$19.57 billion raised by 52 companies. Photo: Dickson Lee

HongKongExchangesandClearingisontracktobeatNewYorkStockExchangetoreturnasthetopinitialpublicoffering(IPO)marketthisyear,forthefirsttimesince2011.

Inthefirst11monthsoftheyear,HongKonghada15.7percentmarketshareofIPOfundsworldwide,with71companieslistinginthecityraisingatotalofUS$31.2billion.Thatisalreadymorethanthefull-yearfigureofUS$29.7billionraisedlastyear,accordingtoDealogicdatareleasedexclusivelytotheSouthChinaMorningPost.

HongKong’sperformancethisyearputsitfaraheadofsecond-placeNewYork,whichhasa9.8percentmarketsharewithUS$19.57billionraisedby52companies.

HongKongwasbeatenbyNewYorklastyearafteritlosttheAlibabaGroup’srecordUS$25billionlisting.Withthee-commercegiant’slisting,theNewYorkmarketsawUS$74.18billionoffundraisingby118companies,comparedwithHongKong’sUS$29.7billion.

AfterHongKongandNewYork,NasdaqisrunningthirdwithUS$17.46billionandShanghaifourthwithUS$17.11billion.Shenzhen’sChiNext,whichhasraisedUS$4.83billionsofar,is14th.

“ThestrongstockmarketrallyinthefirsthalfofthisyearallowedseverallargebrokeragehousesonthemainlandtoconductIPOinHongKong.NewYorkbeatHongKonglastyearmainlyduetotheAlibabadeal.Thetableshavebeenturnedthisyear,”saidJosephTongTang,executivedirectorofSunHungKaiFinancial.

TongsaidheexpectsHongKongtoremainontopoftheIPOleaguetableasmanymainlandfirmswillstillneedtoraisefundsinthecity.

“ManymainlandcompaniesareinfavouroflistinginHongKongasthemarkethasmoreinternationalinvestors.Inaddition,themainlandIPOmarketissuspendedfromtimetotime.promptingmainlandfirmstooptforHongKong,”hesaid.

UnlikeHongKongorWesternmarkets,wherecompaniesdecidewhentogopublic,theChinaSecuritiesRegulatoryCommissioncontrolsthepaceoflistingandhassuspendedIPOeighttimesinthepasttwodecadestotacklebearmarketsorinresponsetomarketmalpractices.

ThemainlandmarketwasmostrecentlysuspendedbetweenJulyandearlyNovemberinthewakeofthestockroutthatsawmarketcapitalisationinShanghaiandShenzhenslashedbynearlyathirdfromthemid-Junepeak.

ThemainlandIPOmarkethadalsobeenfrozenformorethanayearfromlate2012.

SuspensionslikethesehaveworkedwellforHongKong,makingitthetopIPOmarketforthreeyearsinarowfrom2009to2011.The2008financialcrisisthatseverelydentedWesternmarketsandforcedsomecompanies–likeItalianluxuryfashionbrandPrada–tolistherealsoworkedinHongKong’sfavour.

Despitethegoodnumbers,thequalityofsomeofthenewlistingshasbeenacauseofregulatoryconcern,however.SecuritiesandFuturesCommission(SFC)chairmanCarlsonTongKa-shinglastmonthsaidthecommissionwouldreviewthelistingregime.

Tong’sstatementcameafterwildswingsinsomeofthenewstocksontheGrowthEnterpriseMarket(GEM)anddubiousbackdoorlistings.

ItismostlyfinancialfirmsthatraisemoneyinHongKong,withthecityfailingtoattracttechnologycompaniestolisthere.AlibabaoptedforNewYorkafterHongKongregulatorsrefusedtoallowitdual-classshares.

“TheSFCreviewislikelytotightenupthelistingprocess.ThismaycutdownthenumberofnewlistingsinHongKong.However,itwouldbenefittheindustryinthelongrunasitcouldallowtheHongKongIPOmarkettodevelopinamorehealthyway,”JosephTongsaid.“TheSFCreviewcouldalsoseekwaysofattractingmoretechnologyfirmsandstart-upstolisthere.”

LouisTseMing-kwong,directorofVCBrokerage,saidhebelievesIPOsmayslowdownnextyear.

“ManyIPOshavenotdoneverywellasthemarketsentimentisweak.StockmarketoutlookinHongKongandthemainlandhasbeenaffectedbytheslowdownofthemainlandeconomy,”Tsesaid.

BankofQingdao,whichdebutedinHongKongonThursday,wastradingslightlydown,afterpricingthestockatthebottomofitsindicativepricerange.