Hong Kong is expected to maintain its top position globally in terms of total funds raised from initial public offerings, while Shanghai will jump to second place in 2016, according to a new report issued by KPMG.
Hong Kong is estimated to see companies raising funds totaling HK$195 billion (US$25 billion) from IPOs this year, securing its number one position for a second consecutive year. IPO proceeds, however, will register a three-year low and decline 26% from HK$263 billion (US$33.9 billion) in 2015.
Shanghai will surpass New York Stock Exchange, NASDAQ and London Stock Exchange to become the second largest IPO market, witnessing companies raising HK$95 billion (US$12.3 billion) in total via IPOs this year.
The New York Stock Exchange is a close third, with HK$94 billion (US$12 billion) in total IPO proceeds, followed by Toronto Stock Exchange and London Stock Exchange. NASDAQ has dropped out of the top five markets this year.
“We have seen continued strong momentum in Shanghai and Shenzhen in the second half of this year, driven by accelerated IPO approvals and listings of several regional commercial banks,” said Charles Wan, Head of the Capital Markets Development Group, Northern China, KPMG China.
“The financial services sector helped to boost the Shanghai IPO market – seven regional commercial banks completed their listings this year and raised RMB28.7 billion. This sector will continue to be a key growth driver, with nine additional IPO applications in the pipeline from regional commercial banks,” he added.
Similarly, the decline of total IPO proceeds in Hong Kong is primarily due to a decrease in the number of sizable deals, those raising over HK$5 billion or more. Only ten companies raised more than HK$5 billion in 2016, in contrast to 15 in 2015.
The financial services sector continues to be the major contributor in Hong Kong, in terms of funds raised in 2016, accounting for nearly 70% of total funds raised, up 54% from a year earlier. Nine out of the top ten IPOs are financial services organizations.
For 2017, KPMG forecasts 120 companies will raise HK$200 billion (US$25.8 billion) in Hong Kong.
In mainland China, around 700 companies are queuing to list. An acceleration of IPO approvals and the gradual establishment of multi-tiered capital markets are expected to help speed up the process.