Staff Reporter
Hong Kong is set to witness an increase in both the number and size of initial public offerings (IPOs) this year, fueled by a loose monetary policy and a significant rise in average deal sizes, which have doubled to $1.3 billion in 2024, analysts report.
Louis Lau, a partner and head of the Hong Kong Capital Markets Group at KPMG China, highlighted the growing appeal of the city for IPO applicants.
“With positive momentum and rising investor confidence in the Hong Kong IPO market, the city is becoming an increasingly attractive option,” he noted in a recent report.
A standout example is Midea Group Co. Ltd.’s $35.8 billion IPO in September, marking the largest listing in Hong Kong since early 2021.
This deal has significantly raised the average, but even without it, Hong Kong has seen an uptick in IPOs exceeding $2 billion.
KPMG’s data indicates that there were six such deals over the past year, compared to just four in 2023. Notably, four of the ten largest IPOs in the last three years occurred in 2024, according to LSEG.
Analysts predict that this positive trend will persist, with a “steady stream of sizable IPOs” anticipated throughout the year.
Elaine Tan, Senior Manager for Deals Intelligence in Asia-Pacific at the London Stock Exchange Group (LSEG), shared insights with Hong Kong Business about a robust lineup of upcoming listings, featuring companies like CATL, Jiangsu Hengrui Pharmaceuticals, and Foshan Haitian Flavouring & Food.
She indicated that these listings could help the market surpass the IPO activity seen in 2024.
“Technology, healthcare, industrials, and consumer staples are expected to lead the way for upcoming IPOs,” Tan stated in an email response to inquiries.
Financial Secretary Paul Chan noted in a speech on February 26 that more than 100 IPO applications are currently being processed by Hong Kong Exchanges and Clearing Ltd.
Last year, Hong Kong saw 63 completed IPOs, with at least 27 involving local firms, according to data from KPMG and LSEG. In total, the city raised $82.9 billion across these deals, marking a 78% increase from the previous year and securing its place among the top five global IPO markets.
Tan emphasized that strong regulatory support and ongoing interest rate easing could provide an additional boost to the IPO landscape. Furthermore, the inclusion of more Middle Eastern stock exchanges as recognized venues is expected to encourage secondary listings in the region, according to Louis Lau.
Despite a slow start to 2024, Hong Kong’s IPO market gained momentum in the second half, highlighted by the significant listing from Midea Group.
This uptick pushed total equity capital market activity in the city to $24.7 billion, a 45% year-over-year increase, with Chinese issuers accounting for 90% of the funds raised.
Trade Wars Impacting Hong Kong’s Deal-Making Activity
Deal-making in Hong Kong has faced significant challenges over the past two years due to geopolitical and regulatory uncertainties, along with rising interest rates, inflation, and market volatility, according to Elaine Tan from the London Stock Exchange Group (LSEG).
One of the major concerns this year is the ongoing trade tensions between the U.S. and China, which Tan warns could negatively affect market sentiment.
In 2024, IPOs in the Asia-Pacific region—excluding Japan—plummeted to a decade low, raising only $45.2 billion. This marks a 33.1% decrease from 2023, with IPO volumes down by 12%, based on LSEG data.
Tan noted that Hong Kong’s IPO market is also struggling due to a lack of interest from local companies in listing on the exchange.
While the Hong Kong Stock Exchange reported at least 27 IPOs involving local firms that collectively raised $281 million—a 35% increase—Tan expressed concerns that many Hong Kong issuers are opting to list in the U.S. instead of domestically. This trend is similarly observed in Singapore.
“While local exchanges have their own advantages, U.S. markets offer greater liquidity, a more diverse investor base, and enhanced global visibility, making them an attractive option for companies seeking growth and expansion,” she explained.
Notably, Hong Kong secured three of the eight largest equity capital market deals in the Asia-Pacific region (excluding Japan) in 2024, with these deals involving Mainland Chinese companies: Midea Group, Ping An Insurance (Group) Co. of China, and Gold Pole Capital Co.
