‘Gradual’ IPO market recovery seen in second half: PwC

IPO fundraising continued to be slow in the first half of the year.

The gradual recovery of Hong Kong’s initial public offering (IPO) market is expected in the second half of the year after the market recorded a slow first half, PwC reported.

“In the first half of this year, the full resumption of travel between Hong Kong and Mainland China helped capital markets to rebound. However, strengthening inflation prompted many countries to raise interest rates, which has affected investor sentiment,” Benson Wong, PwC Hong Kong Entrepreneur Group Leader, said.

“Currently, investors are adopting a wait-and-see approach, which is slowing the recovery of the IPO market. Many companies are waiting for the market to improve before going public. We hope the governments of Hong Kong and Mainland China will expand the scope of Stock Connect, thus providing more opportunities for businesses and investors.”

PwC reported the size of IPOs was generally modest with total funds raised projected to be around HK$17b. This reflected a 14% drop year-on-year. PwC linked this to accelerating inflation, as well as interest rate hikes amongst other geopolitical tensions.

Over the same period, PwC expected 30 new listings, up 11% compared to the first half of 2022.

The main sectors were industrial and materials (28%), retail, consumer goods & services (25%) and financial services (18%). In the first half of 2023, two companies were listed through the Main Board, while one GEM Board listing switched to the Main Board without any funds being raised.

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