Hong Kong to reclaim top five global IPO ranking in 2024, predicts KPMG

A-share market retains top spot in global fundraising in 2023

09 January 2024

3 min read

9 January 2024, Hong Kong (SAR), China ("Hong Kong") – Despite geopolitical uncertainties and weak recovery for a number of major economies, KPMG's latest Chinese Mainland and Hong Kong IPO Markets 2023 Review and 2024 Outlook reveals that the A-share market has once again outperformed its global counterparts, securing the top two positions in global IPO rankings two years in a row. While Hong Kong IPO activities remained sluggish in 2023, the report predicts a rebound this year, which will allow Hong Kong to reclaim its position amongst the top five global IPO rankings in 2024.

In 2023, the global IPO markets raised USD 131.1 billion across 1,371 deals, representing a decrease of 33% and 10% in total funds raised and number of IPOs as compared with 2022, respectively. Amid the overall decrease, the US stock exchanges were among the few to record improvements in their IPO activities, backed by the completion of the two largest IPO deals during the year. Four out of the top ten global IPOs were related to the semiconductor industry, as the explosive growth in generative AI tools have fuelled investor interest in advanced computing technologies.

Paul Lau, Partner, Head of Capital Markets and Professional Practice, KPMG China, says:

In 2023, global IPO activities encountered notable challenges due to a combination of factors, including geopolitical uncertainties, high interest rates, and a slower-than-expected economic recovery. While the effects of these challenges might endure into 2024, there is reason to believe that the worst is over, presenting an opportunity for IPO markets to stabilise soon. In 2024, IPO candidates looking to restart their IPO plans will need to be adaptable and resilient in the face of changing economic conditions to increase their chances of success.

The Shanghai Stock Exchange and Shenzhen Stock Exchange raised RMB210.8 billion and RMB148.1 billion, representing a decrease of 47% and 32% as compared to 2022, respectively. Nevertheless, the A-share market continued to be pivotal in championing global IPO fundraising, commanding approximately 40% of the total funds raised in 2023.

The top three largest A-share IPOs in 2023 were all related to the semiconductor industry, reflecting the support and interest from both regulators and investors in technological innovations and advanced manufacturing. Despite a recent dip in the A-share IPO pipeline, the count remains robust, with approximately 780 applicants. Of these, 68% belonged to the industrials and TMT sectors, indicating a sufficient number to sustain IPO activities well into 2024.

Louis Lau, Partner, Capital Markets, KPMG China, says:

The Chinese Mainland's post-Covid-19 economic recovery has fallen short of expectations. It is imperative for the Chinese government to support the positive development of its capital markets to effectively serve the real economy. Looking ahead to 2024, A-share IPO activities are expected to remain steady as regulators continue to support areas related to technology, innovation and sustainability. These measures will foster long-term and sustained growth of the A-share capital market.

Hong Kong's IPO market concluded the year with 70 IPOs, raising a total of HKD46.3 billion, representing a significant drop-off of 21% and 56% as compared to 2022, respectively. Consumer market companies remained a bright spot for Hong Kong, recording the largest IPO in terms of proceeds for two consecutive years. The Healthcare/Life Sciences sector was the second largest sector, raising HKD 9.4 billion, with HKD 4.0 billion contributed by seven pre-revenue biotech firms.

During last year, Hong Kong ushered in a suite of strategic listing reforms. The introduction of Chapter 18C helps boost the city’s attractiveness to a wide range of specialist technology companies. The GEM listing reform will enhance GEM's attractiveness for high-growth, high quality start-ups and SMEs across the Greater Bay Area, providing an important alternative source of funding, which coincides with the Hong Kong government’s commitment to supporting SMEs to take their business to the next level.

Hong Kong was also home to Asia’s first-ever Saudi Arabia exchange-traded fund, as the city further strengthens its cooperations with the Middle East. Hong Kong is expected to continue encouraging interconnectivity with the Middle East, which could lead to greater interest in the city’s capital market or potentially cross-border listings of Middle Eastern companies in Hong Kong. These developments will further fortify Hong Kong’s position as one of the premier international financial centres in the world.

Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG China, says:

2023 marked a slow year for the Hong Kong IPO markets, as both corporates and investors exhibited caution amidst global market uncertainties. Despite the prevailing subdued market sentiments, the fundamentals of Hong Kong’s capital market remain robust and resilient. With investors shifting their attention towards technologies such as artificial intelligence, semiconductors and green technology, Hong Kong is well positioned to spark a recovery in its IPO activity by embracing these growing trends.

-Ends-

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