As investors favor competitor markets, Hong Kong’s IPO scale has shrunk

The decline in the number of new stock listings in Hong Kong this year has made it an exception to the global market, as there are still concerns about the prospects of China’s technology industry after Beijing imposed a brake on offshore stock sales.

According to data from Dealogic, Hong Kong’s initial public offerings this year raised less than US$26 billion in funds, a decrease of 10% from 12 months ago and more than one-fifth of the total in 2020.In contrast, global IPO fundraising Skipped This is an increase of 75% from last year’s total, and transactions in New York alone have increased to approximately US$300 billion.

Banker has Hong Kong is expected to benefit The suppression of technology companies from Chinese supervision began immediately after the ride-hailing group Didi Chuxing went public in the US in June, and was initially expected to focus on New York.

However, Beijing’s plan for a new approval system for overseas listings lacks clarity, which hinders efforts to shift listing activities from Wall Street to the Asian financial center.

Friday Didi Announce After Beijing investigates the company on data security issues, it will be delisted from the New York Stock Exchange. Although Didi said it plans to list in Hong Kong, the investigation and its sudden delisting from Wall Street a few months after its initial public offering has added uncertainty.

The record decline in the number of listings in Hong Kong in the first half of the year reflects the extent to which the market relies on a steady stream of IPOs from Chinese technology groups. Faltering because of worry On how and when start-ups can obtain approval to sell shares overseas.

Jason Elder, a partner of the Hong Kong Mayer Brown Law Firm, said: “This year is marked by a period of regulatory uncertainty and increased volatility in the global market”, adding that investors and issuers are still waiting for Chinese regulators to provide relevant information. Details of how to deal with it.this Regulations on Approval of Overseas IPOs Will work.

For a long time, Hong Kong has positioned itself as a major capital city for Chinese companies to raise funds overseas, and has redoubled its efforts as the IPOs of these groups in New York stalled and China focused on expanding its capital market.

Yu Dehua, chief executive of the Hong Kong Monetary Authority, said that the number of international investors entering the mainland capital market through Hong Kong (and vice versa) is increasing significantly. “We are part of China, but we are also an indispensable part of the international financial system,” he said at the Financial Times Global Banking Summit this week.

According to a senior executive of Goldman Sachs, more than half of the Chinese companies that Goldman Sachs is seeking an IPO in New York are considering moving their listing locations to Hong Kong.

However, as the stock price of Cloud Village, a music streaming platform owned by technology group NetEase Holdings, fell 2.5% on the first day of trading, hopes that trading volume could still rebound were hit on Thursday.IPO has Planned for august However, with the intensification of technological crackdowns, the transaction target has dropped from approximately US$1 billion to US$500 billion.

Although only US$422 million was raised in the end, Cloud Village is still Hong Kong’s largest IPO in months. It was once regarded as the vane of Chinese technology companies listing in Hong Kong.

“Stock price is always a good storyteller,” said Dickie Wong, head of research at Kingston Securities. He added that supporters including parent company Netease, Sony Music and Orbis have pledged to buy USD 350 million worth of shares as cornerstone investors, which means that the transaction only raised USD 72 million from outside investors. . “Neither local nor international institutional investors are interested in this company.”

Broader scope of Hong Kong stock offerings Poor performance Within a few weeks and months after listing. According to Dealogic’s data, 80% of the city’s 73 IPOs were traded at a price lower than the issue price this year, an average decline of 15% since the listing.

Chinese companies almost stop all offshore IPOs Large amounts of user dataBeijing’s IPO implemented in July for national security considerations also restricted China’s IPO in the United States.

But this year’s New York’s overall equity financing surged because from Special Purpose Acquisition Company.

In contrast, the Hong Kong Exchanges and Clearing has only recently completed a consultation on the proposal to allow Spac to be listed, and its conclusions have not yet been announced, although earlier guidance points to a more restrictive system than its peers.

Traders and brokers also warned that Hong Kong is facing fierce competition from the Shanghai and Shenzhen exchanges. This year’s total financing is 8% higher than last year, reaching US$61.5 billion.

“The Hong Kong Stock Exchange is not a complete monopoly,” said Huang of Kingston Securities. “This is just one of the Chinese exchanges.”

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