China

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  • Service: Audit
  • Type: Press release
  • Date: 7/9/2014

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Hong Kong’s IPO revenues to exceed last year’s HKD169 billion, forecasts KPMG 

9 July 2014


KPMG forecasts Hong Kong IPO proceeds for 2014 to exceed last year’s HKD169 billion. This is driven by a strong performance in the first half, although relatively weak reception for a number of planned mega IPOs has impacted overall sentiment.

 
Excluding listings by introduction or transfers from the Growth Enterprise Market (GEM) to the Main Board, there were 24 IPOs in the second quarter of 2014, bringing the total in the first half to 44, with proceeds of HKD80.8 billion. In comparison, for the first half of 2013, 21 IPOs raised a total of HKD39.7 billion.


Rebecca Chan, Partner and Head of Hong Kong Capital Markets, KPMG China, says: “More entities were listed before the end of the second quarter because the IPO pipeline saw a build up prior to the new public disclosure requirements, effective on 1 April 2014. Sixteen out of the 24 IPOs occurred in the month of June. We expect to see the remaining pipeline will provide market momentum in the second half of 2014, particularly in July, with over 20 companies expected to list this month.”


Despite the increased number of IPOs in the second quarter compared to the first three months of 2014, overall market sentiment was weak due to sluggish investor demand and market uncertainties, particularly for the mega IPOs.


Louis Lau, Partner, KPMG China, says: “In the second quarter, seven out of the 23 Main Board IPOs were under-subscribed in the retail portion and, interestingly, all of these IPOs were seeking to raise above HKD1 billion. Such weak market demand for relatively large-sized IPOs may prompt potential applicants to take a wait-and-see approach for the rest of 2014.”


KPMG expects non-bank financial services, in particular micro and small loan companies to be a focus for IPOs. Though KPMG does not expect the number of deals and IPO proceeds from this sector to outweigh other sectors in the short run, it has relatively high growth potential and is expected to attract more market attention compared to traditional entities.


Separately, the upcoming Shanghai-Hong Kong Stock Connect – to establish mutual stock market access between Mainland China and Hong Kong – will boost the flow of funds between the two markets.


Lau adds: “When the scheme is launched later this year, it will add momentum and, at the same time, volatility to the stock market. Southbound investments under the scheme will add liquidity and expand the investor base in Hong Kong’s stock market, hopefully stimulating the sluggish IPO market.”


Chan concludes: “The overall performance in 2014 will depend on the fourth quarter, the traditional peak season for Hong Kong listings. Additionally, interest rate movements, timing of QE tapering and China economic performance will continue to affect Hong Kong’s IPO market. The withdrawal of IPO plans by WH Group, reduced appetite for large-sized IPOs together with weak investor demand in the second quarter, have impacted the pipeline. However, our view is that there is a good chance for full year IPO proceeds to exceed last year’s HKD169 billion, given the strong performance in the first half.”


– Ends –

 


About KPMG

 

KPMG is a global network of professional firms providing Audit, Tax and Advisory services.  We operate in 155 countries and have 155,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

KPMG China has 16 offices in Beijing, Shanghai, Tianjin, Shenyang, Nanjing, Hangzhou, Fuzhou, Xiamen, Qingdao, Guangzhou, Shenzhen, Chengdu, Chongqing, Foshan, Hong Kong SAR and Macau SAR, with around 9,000 people.

 

KPMG China refers to the member firms of KPMG International in Mainland China, Hong Kong SAR and Macau SAR.

 

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