Hong Kong new listings volume sinks to 9-year low on China slowdown

Hong Kong’s new listings volume plunged 90 per cent to a nine-year low this year, data showed, as China’s sharp economic slowdown and its regulatory drive cast a long shadow over the city’s prospects as a destination for initial public offerings (IPOs).

The drying up of share listings in Hong Kong bodes ill for investment banks, who make about a third of their revenue in the region from equity capital market deals, and for the Chinese-ruled territory’s status as a global financial hub.

Only $2.1 billion has been raised this year via IPOs and secondary listings in Asia’s most popular fundraising venue compared to $20.7 billion by the same time last year, according to Refinitiv data, the slowest start to a year since 2013.

“One of the reasons for the IPO market in Hong Kong falling so sharply is the deteriorating financial performance for most of the applicants in the previous financial year, and it is possible that will the case for the first half of the current year too,” said Frank Bi, partner at law firm Ashurst.

“Such adverse change effectively delays the application timetable.” JD Technology, the fintech arm of Chinese e-commerce company JD.Com, is the latest to delay an up to $2 billion Hong Kong IPO because domestic regulatory approval for the deal has not been forthcoming, Reuters reported last week.