New listing regime for biotech firms and companies from emerging and innovative industries to provide further market impetus
The Hong Kong IPO market had a robust 2018 Q1, with 62 new listings raising a combined HKD 24.4 billion, a year-on-year increase of 82 percent. In addition, KPMG has lifted its 2018 fundraising forecast to HKD 250 billion from HKD 200 billion. This is due to the expected launch of a new listing regime in Q2, which will see biotech firms and companies from emerging and innovative sectors become new growth drivers.
Based on a combination of data as at 15 March 2018 and KPMG estimates, the number of Main Board IPOs in 2018 Q1 increased 45 percent year-on-year to 29. Total fundraising nearly doubled to HKD 22.1 billion from HKD 12.1 as a result of three sizeable deals from the banking and real estate industries.
Maggie Lee, Head of Capital Markets Development Group, Hong Kong, KPMG China, says: “The conclusion of the consultation on a new listing regime for companies from emerging and innovative sectors is expected to be announced in April. As a result, we expect to see listings of these companies as early as this summer”
“In addition to the interest from mainland China companies that are technology or internet-related, we are also seeing tremendous interest from biotech firms to list in Hong Kong, driven by the proposed new chapter in the Main Board specifically for the sector.”
The A-share IPO market, on the other hand, experienced a slowdown in 2018 Q1. The Shanghai Stock Exchange and Shenzhen Stock Exchange recorded 38 new listings for a combined RMB 40 billion in 2018 Q1, compared to 134 IPOs and RMB 69.6 billion from a year ago. Companies from traditional sectors such as financial services continue to dominate the market.
Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, says: “IPOs by companies from the new economy sector are on the rise given the government’s emphasis on promoting technology and innovation. At the same time, maintaining the quality of IPOs will remain a top priority for regulators. The ongoing rigorous review of listing applications is therefore expected to continue.”
As at 15 March 2018, the number of A-share IPO applicants stood at 388, down from 511 at the end of 2017.
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