Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Hong Kong listings dry up under shadow of protests

Hong Kong listings dry up under shadow of protests

‘Terrible’ conditions on stock market deter deals but some expect pipeline to pick up later in year

When AB InBev’s Asia brewing business launched its second attempt at a Hong Kong stock market listing last week, chief executive Jan Craps faced a volley of questions about whether the territory was still the best venue for an initial public offering of almost $5bn after more than three months of political upheaval.

“We believe Hong Kong is the best financial centre for us in Asia to do the listing,” he said. “There is a very bright future for Hong Kong as a financial centre.”

Mr Craps is unusually upbeat. The flow of initial public offerings in Hong Kong has nearly evaporated in recent months, as companies hold off on planned listings in the face of volatility spurred by an escalating US-China trade war and intensifying violence between police and protesters on the Asian financial hub’s streets.

Hong Kong Exchanges and Clearing, the local bourse operator, has seen only two IPOs price since the end of July, raising a total of just $33m and taking cumulative funds raised in 2019 to $10.7bn, according to data from Dealogic.

That is just a third of the total from this time last year, when Hong Kong was well on its way to taking the global listings crown for 2018. Meanwhile, the number of active listings applications from companies yet to go ahead with an offering has climbed to a record high of more than 200, according to KPMG.

The fall is particularly sharp thanks to a run of big-ticket listings in 2018 that saw Xiaomi, Meituan Dianping and China Tower raise almost $16bn in total between the end of June and mid-September.

But HKEX’s rivals in New York have seen no such drop-off. The New York Stock Exchange and Nasdaq have priced a combined $5.39bn worth of IPOs in August and September across 19 deals. Both are now on a course to dethrone Hong Kong’s exchange as the world’s top listings destination just as it targets London Stock Exchange shareholders with a charm offensive, selling them on Hong Kong’s potential as the gateway to a globalising Chinese market in its bid to buy the British bourse.

Jason Elder, a partner at law firm Mayer Brown in Hong Kong, said the uptick in volatility for the territory’s stock market had unnerved companies that were in the process of listing this year.

“It becomes very difficult to price your IPO against a volatile window, I think that’s why people are waiting,” Mr Elder said. But he added there was little sign of companies abandoning Hong Kong for other bourses, with recent reforms to the exchange’s listing rules — such as allowing weighted voting rights — helping prevent applicants from changing venues.

“That all helps, but it only helps against a backdrop of positive investor sentiment,” he said.

Sentiment in Hong Kong has worsened markedly since the end of July, with the Hang Seng stock index falling 9 per cent in early August. Earlier this month, Fitch became the first big rating agency to downgrade the territory since the start of mass protests demanding withdrawal of an extradition bill that would have allowed criminal suspects to be sent to mainland China.

Protester demands have since expanded to include greater police accountability and democratic reforms, with large-scale demonstrations continuing despite plans announced by Carrie Lam, Hong Kong’s chief executive, to fully withdraw the bill.

“The Hong Kong IPO market has been absolutely terrible,” said the head of Asia capital markets at one international bank. He added his bank and others had also begun opening credit lines to many high-growth private companies in the region, relieving the pressure for a quick listing.

Hong Kong also faces a challenge from China’s new technology and science-focused Star Market in Shanghai. The high-profile project has direct backing from president Xi Jinping and threatens to swipe Chinese tech listings away from the territory, although there is no sign yet that it could touch bigger deals such as AB InBev or the planned secondary listing of Alibaba, which could raise up to $20bn if it goes ahead.

Louis Lau, a partner at KPMG China’s capital markets advisory group, said there were “a lot of uncertainties, globally and locally” behind the quiet spell for IPOs, including the market impacts of trade tensions and recent social unrest in Hong Kong. “It all depends on the market conditions,” he said.

KPMG expects the taps of Hong Kong’s IPO pipeline to turn back on in the fourth quarter amid encouraging signs such as the AB InBev listing and the revival of another application by logistics company ESR Cayman. But Mr Lau added that the chance of Hong Kong catching up with New York’s bourses by the year’s end really depended on whether all big deals, such as that by Alibaba, are completed by the end of the year.

“Otherwise the gap is pretty big,” he said.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×