120 new companies expected to list in Hong Kong in 2015: PwC

Meanwhile, SMEs are expected to dominate IPOs.

Reflecting its status as the international capital raising platform for Greater China, PwC expects 120 new companies to list in Hong Kong in 2015 - 100 on the main board and 20 on the GEM board. Total funds raised are expected to come in at HKD 200 billion.

According to a release from PwC, in 2014, HKD 227.8 billion were raised, representing an increase of 33% on the HKD 171.3 billion raised the year before. Last year saw 122 new listings (vs. 112 in 2013).

The release noted that 103 of these were on the main board (against 89 in 2013). Retail, consumer goods and services dominated with 46% of new listings, followed by financial services (including real estate) at 16%.

Total funds raised in 2014 amounted to HKD 225.7 billion. There were 19 listings on the GEM board (down from 23 in 2013). Retail, consumer goods and services, along with industrial products, were the main sectors, with 37% and 32% of new listings respectively. A total of HKD 2.1 billion were raised on the GEM board last year.

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“The positive momentum that started in the second half of 2013 carried through to 2014. Although the IPO market slowed down slightly in the second quarter because of geopolitical and other concerns, it bounced back in the second half,” says Benson Wong, Assurance Partner, PwC Hong Kong.

“Ample funds in the Hong Kong and overseas markets, together with steady data coming out of the US and China gave a further boost to new listings in the second half. A number of mega-sized IPOs – those raising over HKD 10 billion each – were also successfully launched.”

Hong Kong’s position as a leading international fundraising platform is further underlined by its rise to second position worldwide in terms of fundraising activity in 2014. The climb up from fourth place was thanks to a wave of mega-sized listings.

Investors are generally confident that they have successfully identified and factored in all the major challenges to the IPO market this year. These include a long-expected hike in interest rates by the US Federal Reserve, uncertainties over the global economy and depressed oil prices.

Together with sufficient funds available in the market, PwC believes Hong Kong’s IPO market for 2015 will continue to be active.

“As China’s leadership puts it, China is adjusting to a 'new normal’. But even with a moderate growth rate, China will continue to enjoy a significant margin over even the most optimistic scenario for the US. We believe there’s an appetite among investors in companies that will benefit from the continued growth of China’s economy. At the same time, the Hong Kong-Shanghai Stock Connect provides further incentives to investors” says Edmond Chan, Co-Head of Capital Markets Services, PwC Hong Kong.

“We expect to see more Chinese companies, both state and private-owned, looking to Hong Kong as the ideal place to raise both capital and their international profile especially given the relaxation of the H-share listing requirements and closer collaboration with the CSRC.”

PwC expects small-and-medium-sized companies to dominate Hong Kong’s IPO markets in 2015. While the retail and consumer products and services and financial services sectors are also expected to take up a large share of new listings again this year.

In terms of the Shanghai and Shenzhen markets, PwC expects 200 new listings in 2015 (vs. 125 in 2014), with total funds raised estimated at RMB 130 billion (sharply up on the RMB 78.6 billion last year). Increasing domestic investors’ appetite, along with reforms put in place to internationalise the market and increase transparency, are expected to greatly benefit China listings.

“Looking ahead, the Hong Kong-Shanghai Stock Connect will achieve its full potential in the medium term. The city’s position as the largest RMB offshore market and its sound financial infrastructure will continue to strengthen its image as an attractive listings destination,” adds Mr Chan.

PwC has no doubt that Hong Kong will maintain its position as one of the top three IPO markets in the world this year. Its effort to expand its range of products and review its regulations and practices to keep up with the pace of international developments are essential steps in maintaining that competitiveness in the long run.