While global IPO momentum has been disrupted due to the ongoing pandemic, fundamentals in Hong Kong and mainland China IPO markets remain steady overall. The number of IPOs in Hong Kong in the first quarter increased compared with the same period last year, as positive sentiment carried over from late 2019. However, as the COVID-19 outbreak persists, volatility in the economy might impact IPO activity volume, deal valuations, and access to capital at least in the short term until the situation improves, according to KPMG analysis.
Global funds raised have increased by 54 percent compared to the same period last year despite market uncertainties. The US, mainland China, and Hong Kong remained key contributors to the IPO market globally in the first quarter. The Hong Kong Stock Exchange placed fifth in terms of funds raised, while the Shanghai Stock Exchange claimed the top spot due to a sizeable listing and the continuing popularity of the STAR Market. Others ranked in the top five include NASDAQ, NYSE, and the Stock Exchange of Thailand. However, looking ahead, high volatility in global stock markets due to sharp increases in confirmed COVID-19 cases in the US and Europe could significantly affect global economies and IPO activities.
Paul Lau, Partner, Head of Capital Markets, KPMG China, said: “The speed of an economic turnaround will depend on various factors, including effective handling of the COVID-19 outbreak and its financial impact as well as continuing progress in addressing other global economic uncertainties.”
The Main Board recorded 35 new listings for a combined HKD 14.1 billion during the quarter. The number of completed Main Board IPOs is higher than in the same period for the past five years. However, funds raised decreased by approximately 32% in the first quarter compared with the same period last year due to a lack of sizeable deals.