After being in the doldrums for much of the year, initial public offering (IPO) activity in Hong Kong has started to ramp up again, making the HKEX main board the world’s fourth-largest fundraising platform for stock launches.
Following a dry spell during the first half of 2022, the new listings turnaround came in the third quarter for HKEX, with 27 IPOs raising a total of US$6.6bn, more than twice as much as the US$2.37bn raised during the first two quarters of 2022. Despite the strong showing in the third quarter of 2022, proceeds for the first nine months of the year dropped by 76% compared to the same period in 2021.
However, when it comes to bragging rights, HKEX has performed considerably better than two of its traditional rivals in the US. The Nasdaq and the New York Stock Exchange both slipped out of the top 10 rankings following a 94% plunge in year-on-year funds raised, according to Refinitiv, the global provider of financial markets data. Meanwhile, EY data shows that the global number of IPOs declined by 44% to 992 in the first nine months of the year compared with the same period in 2021, with proceeds falling by 57% to US$146bn.
HKEX has more than 180 applications in its IPO pipeline
For some market watchers the uptick of IPO listings – homecoming stocks proving significant in the Hong Kong capital markets this year – is a positive sign of things to come, especially with a pipeline of IPO candidates waiting to list. Notwithstanding the prevailing macroeconomic conditions, including concerns over global inflation, as of July 2022, HKEX had more than 180 applications in its IPO pipeline. The bourse expects more companies from the Chinese mainland to join it as dual primary listings.
Prepare for lift-off
At the same time as Hong Kong’s IPO listing space is enjoying a welcome relaunch, the announcement that Hong Kong citizens who are Chinese nationals will be eligible to join China’s space missions has stirred up Jupiter-sized excitement. The China Manned Space Agency announced recently that for the first time, it will recruit ‘taikonauts’ – as Chinese astronauts are known – from the Hong Kong and Macau Special Administrative Regions. The inclusion of Hong Kong candidates in the recruitment drive is being described by several senior members of the Hong Kong administration as an ‘apex’ moment and an endorsement of its investment in scientific research and development.
The new space economy is forecast to be worth around US$1.25 trillion by 2030
The recruitment process has barely started, but already there have been calls from the business and academic communities for Hong Kong to become fully engaged in the opportunities of the new space economy, said to be worth around US$1.25 trillion by 2030. Others have cited Wang Yaping, the first female taikonaut – she completed a spacewalk from the Tiangong space station in 2012 – as a role model for women to pursue hi-tech, science and engineering courses at university.
Whether or not a Hong Kong citizen features in the next cohort of taikonauts, this much looks certain: Hong Kong’s business world – not to mention its academic and tech sectors – has a golden opportunity to explore a new and potentially very lucrative frontier.
