Hong Kong SAR | Publication | January 2020
Recent listing reforms including the weight voted rights and new biotech listing regulations have boosted and diversified Hong Kong’s capital markets, setting an important foundation for the IPO market in 2020.
By the end of 2019, Hong Kong has completed 183 IPOs, raising HK$312.9 billion According to the statistics announced by HKEX, making it once again the top ranking capital raising platform globally, and demonstrating Hong Kong’s resilience as one of the world’s leading financial centres.
Over 2018 H2 and 2019 FY, Norton Rose Fulbright advised on more than a dozen Hong Kong IPOs, majority of which are by Chinese issuers. The Hong Kong IPO market is poised to stay competitive in 2020. So far for 2020, the city holds a healthy pipeline of more than 140 active Mainboard applicants.
The Hong Kong IPO Market is poised to stay competitive in 2020. So far for 2020, the city holds a healthy pipeline of more than 140 active Mainboard applicants.
In 2020, we expect to see:
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More secondary listings by large international companies. |
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An increase in small to medium-sized listings. |
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Active sectors to include property management, technology, pharmaceutical and education. |
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Revived IPOs plan previously put on hold due to political instability. |
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Property management – Much of Hong Kong’s listing activity over 2019 included that of property management companies like Poly Property Development, Times Neighbourhood, Yincheng Life Services, Xinyuan Property and Languang Justbon Services. With infrastructure needs continuing to be a priority in the city, the sector’s pipeline is expected to remain steady and a driving force for the market in 2020. |
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Technology – Closing up 2019 with Alibaba’s massive secondary listing, the 2020 Hong Kong listing pipeline has about 20 TMT companies engaged in cloud services, online gaming, online marketing, online music, the video platform business, big data and AI solutions. The sector is expected to maintain its momentum as government efforts continue to promote smart city development and new technologies. |
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Pharmaceutical – The pharmaceutical sector came second in terms of total funds raised due to the listing of multiple biotech firms in Hong Kong in 2019. An ageing population will continue generating significant demand for healthcare services, supported by the city’s 10-year hospital development plan. |
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Education – The tech and education sectors share strategic synergies. The listings of JH Educational Technology and Edvantage Group Holdings Limited, for example, demonstrate so. The Hong Kong Stock Exchange has become home for Chinese education companies because of its own policy reforms which contribute to listing success and even higher valuations of the entire education sector. |
Notably, less than 10 per cent of the listed companies on the HKEx are non-Chinese companies so the challenge for the HKEx continues to be the strength of its appeal as a formidable capital raising centre for global companies, when compared to competing markets.
“The HKEx has continued to work hard to attract the next wave of new economy companies to list in Hong Kong. It continues to introduce positive and conducive market reforms which have had demonstrable successes like the listings of German eye clinic operator EuroEyes in 2019 and of Australian higher education provider Top Education in 2018.” – Psyche Tai
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