This publication provides a review of the Mainland China and Hong Kong IPO markets for the first half of 2018 and outlook for the rest of the year
Mega TMT listings are set to provide the Hong Kong IPO market with an additional boost in the second half of 2018, according to KPMG’s latest analysis.
In the first half of 2018, Hong Kong recorded 48 Mainboard IPOs, an increase from the 33 listings in 2017 H1. However, total fundraising declined 11 percent to HKD 46.8 billion as a result of a drop in average deal size to HKD 980 million from HKD1.58 billion. GEM ended 2018 H1 with HKD 3.4 billion – a year-on-year increase of 31 percent.
The positivity surrounding the Hong Kong IPO market is driven by the implementation of new listing rules for emerging and innovative companies. This has attracted the attention of many “new economy” companies, including biotech companies previously seeking US listings. KPMG anticipates at least 10 biotech companies to apply for Hong Kong IPOs by the year-end. A large number of technology, media and telecom (TMT) firms are also eyeing Hong Kong listings in light of the improving market sentiment.
As a result, KPMG forecasts Hong Kong IPOs to exceed HKD 250 billion in 2018, nearly double the HKD 129 billion raised in 2017. In addition, Hong Kong is expected to end the year among the top three IPO destinations globally.
The A-share IPO market, on the other hand, experienced a slowdown in both the number of listings and total fundraising in 2018 H1 due to a drop in listing approvals. The Shanghai and Shenzhen stock exchanges raised a combined RMB 93.4 billion with 64 new listings, which was significantly less than the 246 IPOs (RMB125.4 billion) in 2017 H1. In spite of the drop in total fundraising, the average deal size of A-share IPOs nearly tripled to RMB 1.46 billion from RMB 510 million.
KPMG expects the recent introduction of Chinese Depository Receipts (CDRs) to provide a significant boost to the market as it offers a convenient channel for overseas-listed Chinese technologies giants to return to A-shares.Please read the report for our complete analysis of the Mainland China and Hong Kong IPO markets.
*Note: All figures are based on a combination of data as at 15 June 2018 and KPMG estimates. Excludes listing by introduction.