More and bigger IPO deals in Hong Kong expected this year

The IPO pipeline will be bolstered by relaxed monetary policy.

Hong Kong is likely to see more and bigger initial public offerings (IPO) this year amidst loose monetary policy and after the average deal size doubled to $1.3b in 2024, analysts said. 

“With positive momentum and increasing investor confidence in the Hong Kong IPO market, the city is becoming an increasingly attractive option for IPO applicants,” Louis Lau, a partner and head of Hong Kong Capital Markets Group at KPMG China, said in a report.

Midea Group Co. Ltd.’s $35.8b Hong Kong IPO in September — the city’s biggest listing since early 2021 — brought up the average, but even without this, Hong Kong saw more IPOs that surpassed $2b, according to KPMG.

There were six such deals in the past year compared with just four in 2023. Four of the 10 largest IPOs in the past three years also took place in 2024, LSEG said.

Analysts expect the momentum to continue this year with a “steady stream of sizable IPOs.” 

A robust pipeline of listings — including by CATL, Jiangsu Hengrui Pharmaceuticals, and Foshan Haitian Flavouring & Food — has positioned the market to exceed the IPOs recorded in 2024, Elaine Tan, senior manager for deals intelligence in Asia-Pacific at the London Stock Exchange Group (LSEG), told Hong Kong Business.

“Technology, healthcare, industrials, and consumer staples are expected to lead the IPOs,” she said in an emailed reply to questions.
More than 100 IPO applications are being processed by the Hong Kong Exchanges and Clearing Ltd., Financial Secretary Paul Chan said in a speech on 26 February.

Sixty-three Hong Kong IPOs were completed last year, at least 27 of which involved local companies, according to data from KPMG and LSEG. In total, Hong Kong raised $82.9b across 63 deals, a 78% increase from a year earlier, putting it again in the top five global IPO venues.

Strong regulatory support and continued interest rate easing could further boost the IPO market, Tan said.

Including more Middle Eastern stock exchanges as recognized stock exchanges is also expected to drive secondary listings in the region, Lau said.

Hong Kong’s IPO market started slow in 2024, whilst the second half saw the mega-listing by Midea Group, pushing total equity capital market activity in the city to $24.7b, up 45% year on year. Chinese issuers accounted for 90% of the funds.

Trade wars
Deal-making activity in Hong Kong had been slow over the past two years due to geopolitical and regulatory uncertainties, rising interest rates, inflation, and market volatility, Tan said.

One of the key risks this year is trade tensions between the US and China, which could dampen sentiment, she added.
In 2024, IPOs in the Asia-Pacific region excluding Japan fell to a decade low, with only $45.2b raised, according to LSEG data. This was 33.1% lower than in 2023, whilst IPO volumes were down 12%.

Hong Kong’s IPO market is also plagued by the fact that few local companies want to list on the bourse, Tan said.
Whilst the Hong Kong Stock Exchange counted at least 27 IPOs involving local companies that raised $281m — a 35% increase — Tan said that they expect Hong Kong issuers to list in the US rather than domestically. This is also happening in Singapore.

“While the local exchanges have their own advantages, the US markets offer greater liquidity, a more diverse investor base, and global visibility, making it an attractive choice for companies looking for growth and expansion,” she said.

Hong Kong captured three of the eight largest equity capital market deals across the Asia-Pacific region, excluding Japan, in 2024, LSEG said. These were companies from Mainland China — Midea Group, Ping An Insurance (Group) Co. of China, and Gold Pole Capital Co.