In the past two years, due to the global geopolitical and economic uncertainties alongside continued high interest rates, the Hong Kong capital market has been adversely impacted. Nevertheless, the Hong Kong capital market has remained resilient and continued to leverage Hong Kong’s role as a super-connector and super value-adder. With interest rate cuts by Hong Kong banks upon the interest rate cuts initiated by the US Federal Reserve in the second half of 2024, market sentiment has been buoyed. Investors expect further rate cuts in the future, and the overall market conditions will continue to improve.
The Hong Kong IPO market sentiment was cautious in the first half of 2024, but IPO financing activities picked up significantly in the second half, accounting for more than 80% of total fundraising for the year. In 2024, there were 71 IPOs, representing a slight decrease of 3% from 2023. However, total funds raised reached HK$87.5 billion. This was a substantial increase of 89% year-on-year, which placed Hong Kong the fourth globally in IPO fundraising. These listings comprised 67 companies on the Main Board, one de-SPAC and three companies on GEM. The Main Board listings included companies in information technology (IT) and telecommunications services (37%), followed by retail, consumer goods, and services (23%), and industrial and materials (18%). In terms of funds raised, the retail, consumer goods, and services sectors dominated (60%), followed by IT and telecommunications services (22%), and industrial and materials (13%). Among such, 14 companies raised HK$1 billion or above each.
In October 2024, the Securities and Futures Commission and Hong Kong Exchanges and Clearing Limited (HKEX) announced an enhanced timeframe for the New Listing application process, boosting Hong Kong’s attractiveness as the leading IPO market in the region. In addition, HKEX implemented arrangements to provide trading, clearing and settlement services during severe weather conditions since 23 September 2024, driving Hong Kong’s competitiveness as an international trading and risk management centre. The China Securities Regulatory Commission also introduced various measures to strengthen Hong Kong’s financial market by further increasing communication and coordination with relevant departments and supporting qualified industry-leading companies in Chinese Mainland to go public and raise funds in Hong Kong. These initiatives benefit Hong Kong’s IPO market and stimulate the secondary market development.
Diamantina Leong, PwC Hong Kong Capital Markets Services Partner, said: “In line with the recovery of the global IPO market, the Hong Kong IPO market is picking up as boosted by various policy support. With the recent enhancement to the Hong Kong listing rules, companies can list in Hong Kong more efficiently and with greater predictability in the review process. We believe that more companies will be attracted to list in Hong Kong. In the past few years, the gradual revision of the listing regulations has attracted different types of companies to raise funds in Hong Kong. In addition to the successful listing of 18C companies last year, more than 60 companies have been listed under Chapter 18A since its launch in 2018. We anticipate that more new economy companies will come to Hong Kong to raise funds in the future and diversify the Hong Kong market.”
To date, approximately 80 companies have submitted applications to list in Hong Kong. These include large enterprises from traditional sectors such as manufacturing, retail, consumer goods and services, as well as companies from new economy sectors like biotech, medical and pharmaceutical, artificial intelligence (AI) and technology, media and telecommunications (TMT).
PwC is optimistic of the Hong Kong IPO market. We forecast that the upward trend will continue in 2025, with around 70-80 companies listing, raising approximately HK$130-160 billion. This year, the market focus will be on industries such as AI, IT and telecoms, electric energy, and retail, consumer goods, and services.
Eddie Wong, PwC Hong Kong Capital Markets Leader, said: “If the overall capital market remains stable in 2025, as inflation and interest rates continue to fall and government’s economic stimulus measures take effect, many sizable A-share listed companies will list in Hong Kong. Funds raised will reach a four-year high of HK$160 billion. The recovery of the IPO market will stimulate trading activity, enhance liquidity, and increase transaction volumes, facilitating the return to reasonable stock valuation ranges. Additionally, HKEX is actively exploring collaborations with other exchanges to attract overseas-listed companies to dual-list or secondary-list in Hong Kong, or to spin off their China or Asia businesses for listing in Hong Kong. This will boost Hong Kong’s competitiveness as an IPO and financing centre in the long term and reinforce Hong Kong’s status as an international financial centre.”
