ECONOMY | Staff Reporter, Hong Kong

Hong Kong IPO activities to remain active in 2021: EY

This is despite a decline in deal numbers last year.

Hong Kong will continue to have an active initial public offering (IPO) in 2021 but with a small increase in listings in H1, according to Ernst & Young.

The firm said that due to the impact of the pandemic, Hong Kong’s 2020 IPO activity saw a decline of 11% in deal numbers compared with 2019. However, 2020 proceeds had increased to 27% compared to 2019 because of an uptick in secondary listings by US-listed Chinese companies on the Hong Kong Stock Exchange.

The technology industry contributed $123.26b (US$15.9b) and is the largest sector by proceeds.

The average first day returns of newly listed companies on the Hong Kong Main Board in Q4 2020 was 19.7% versus 27.4% in Q3 2020.

Though Ernst & Young predicts a return to an active IPO in 2021, the Hong Kong Stock Exchange's proposed increase in profit requirement for listed companies by 150% to 200%  may have unforeseen impact to small and medium-sized companies that may not be able to meet the new track record profit requirements as currently proposed.

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