PwC expects the Hong Kong market will continue to thrive with an expected total fundraising of between HK$230 billion and HK$260 billion in 2020, supported by a healthy pipeline of companies lining up for floats. More new economy enterprises are expected to seek listing on Hong Kong Exchanges and Clearing (HKEX) in view of the listing regulations reform.
There were 184 new listings in 2019 in terms of numbers of initial public offerings (IPOs), of which 169 were main board listings, mostly comprised of retail, consumer goods & services companies which number of listings increased by 26 compared to number of listings in 2018. However, the number of GEM board new listed companies in 2019 decreased compared to the number of listings in 2018. Fifteen companies were listed on the GEM board in 2019, a decrease of 80% compared year-on-year. Additionally, there were 2 companies listed by introduction on the main board and 20 GEM board listing companies switched to the main board listing without any funds raised.
Total funds raised by IPOs in 2019 reached HK$315.5 billion, marking an increase of 10% from the previous year. With the level of activity in new economy enterprise listings, there was a stronger performance on the main board, which recorded HK$314.5 billion of total fundraising. This is an increase of 11% in funds raised. The funds raised on the GEM board stands at HK$1 billion. This is an 80% decrease in funds raised.
PwC predicts 180 IPOs in 2020, with an estimated total funds to be raised of between HK$230 and HK$260 billion. This amount is similar to the average fundraising amount for the past ten years. The H-share full circulation programme will help attract more Chinese enterprises to list on HKEX and also help to increase H-shares circulation volume in the market. Judging by the number of existing listing application submissions, listings of overseas companies in Hong Kong are expected to remain active in 2020, with the possibility of increasing numbers compared to 2019.
Benson Wong, PwC Hong Kong Entrepreneur group leader says: “We are cautiously optimistic about the Hong Kong IPO market outlook for 2020 despite global geopolitical and economic uncertainties, such as Brexit, interest rate movements and China-US trade friction etc. In the long run, we are very confident that Hong Kong will continue to be the best financing platform in the region as we predict that more new economy enterprises are expected to be listed on HKEX. This will help Hong Kong continue to establish its position as the most important Asian IPO fund raising hub.”
Looking at mainland markets, since the launch of the Science and Technology Innovation Board (STAR Market), it has successfully raised 82.4 billion yuan for 70 high-tech innovative companies. In 2019, there were 201 IPOs on 4 main boards in the mainland, with a total of 253.3 billion yuan of funds raised. The increases in number of IPOs and total funds raised were 91% and 83% respectively. PwC expects stabilized growth in the mainland markets, with 220 new listings and total funds raised of 250 billion yuan for 2020.