Strong pipeline factor in keeping Hong Kong afloat as top global IPO market

Thanks to investors and abundant liquidity.

Hong Kong’s IPO activities for the first half of 2014 reached a decade high in terms of number of newly listed companies, thanks to strong interest from investors and abundant liquidity in the capital market, and it is expected that given the current market situation, the city could remain as one of the top three global IPO markets in 2014.

According to a release from PwC, the first half of the year saw 52 new listings in Hong Kong, with HK$81.2 billion of total fundraising.

The release said that compared to the first half of 2013, that’s a more-than-double increase in both companies listed and total fundraising, cementing Hong Kong’s reputation as an attractive listing destination.

Further, the momentum from the last quarter of 2013 continued through to the first half of 2014, with strong economic fundamentals, which facilitated successful listings of companies.

In addition, market participants are still adapting to new policies resulting from the resumption of the Chinese IPO market. As a result, some Chinese companies are switching to Hong Kong in order to reach out to global investors and funds.

Here's more from PwC:

PwC Hong Kong Assurance Partner Benson Wong says, “Fundraising activities in Hong Kong remain vibrant in the first half of 2014. At the same time, uncertainties in the global economy and geopolitical risks saw some adjustments in pricing.

However, the total number of new listed companies and total size of fundraising are proof of the strong liquidity in the market liquidity. Investors’ interests in IPOs also remain strong.”

In the first half of 2014, retail and consumer goods contributed to the majority of new listings on the Main Board, followed by financial services, energy and mining-related, and IT-related companies.

PwC expects an estimated 110 IPOs with total fundraising of HK$180 billion in 2014, a revised forecast from HK$230 billion earlier this year, which took into account some expected large-scale IPOs in the first half.

Nonetheless, Hong Kong is expected to remain as one of the top three destinations for fundraising globally.

Edmond Chan, PwC Hong Kong Capital Market Services Group Partner says, “A lot of companies are still interested, and are in fact, preparing for a Hong Kong listing. The majority of the listing candidates will be the SMEs.

Traditionally, IPO activities are more active in the second half of the year. Given the stable growth in China’s economy with improving fundamentals, we expect to see more IPO activities, especially mega-sized IPOs.

Retail and consumer goods, telecommunications and internet-related, industrial, and financial services are the industries that are expected to go for listings. There will be some IPOs with funds raised exceeding HK$10 billion in the second half.”