Richard Wang, a partner at Freshfields, expressed that the Hong Kong market is still healthy, with strong momentum and prices that could hold up until the year-end.
Initial public offerings (IPO) applications are rapidly growing at the Hong Kong stock exchange, as prospective issuers want to take advantage of improved market sentiments and a potentially narrow listing window in the face of increasing trade tensions.
112 companies applied on the exchange’s main board in the first four months of this year, a 29% increase from 87 last year. With 43 filings last month, double that of April 2024, the pipeline increased quickly.
After considering active filings from the previous year, 152 companies are waiting to be listed on Asia’s third-largest stock exchange.
Sherlyn Lau, a Hong Kong-based lawyer at Sidley Austin Law Firm, stated that many companies are proceeding with their Hong Kong listings.
She also mentioned that many companies submitted applications quickly because they wanted to be part of the list by the end of the year. This pace is contracting sharply compared to last year’s slower pipeline.
She added that companies are looking for higher valuations after the recent success of the initial public offering (IPO) in the city and growing investor interest in specific active industries like consumer, robotics, energy, biotech, and artificial intelligence (AI).
Lau stated that they are ready to take the opportunity with open hands as they function on the assumption that this momentum will last until 2026.
Richard Wang, a partner at Freshfields, expressed cautious optimism about the IPO prospects for the rest of the year even though the uncertainty in the US could affect the Hong Kong market.
Wang added that a significant portion of Hong Kong shares are from foreign capital, which means that US market volatility does have an impact on the Hong Kong market. The global economy, especially Chinese companies, which are a significant source of new listings in Hong Kong, would be impacted by a possible US recession.
But according to Wang, the Hong Kong market is still healthy, with strong momentum and prices that could hold up until the year-end.
Since US President Donald Trump took office on January 20, the city’s benchmark Hang Seng Index has increased by 15%, and it has increased by 14% from a low on April 7 influenced by tariffs.
According to Dealogic data, Hong Kong’s global share of IPO deal value more than doubled to a five-year high of 7% from 3% a year earlier, with 16 listings raising US$2.35 billion as of the end of April.
Mixue Group, China’s biggest fresh drink business, raised US$510.8 million in the 13th-largest listing internationally this year, making it the city’s largest initial public offering (IPO). In February, Mixue’s retail initial public offering (IPO) received over HK$1.6 trillion (US$206 billion) in subscriptions.
Wang stated that companies want to be prepared and get their applications accepted by the authorities quickly so that they can take advantage of any possible listing window in the second half of the year.
After getting approved by the China Securities Regulatory Commission (CSRC) in late March, Contemporary Amperex Technology (CATL), the largest manufacturer of electric car batteries worldwide, will start its Hong Kong listing the week of May 12.
CATL, which submitted its listing applications to the Hong Kong stock exchange, will raise at least US$5 billion, the largest share offering in the city since Kuaishou Technology’s US$6.2 billion jumbo deal in January 2021.
Two Chinese industry companies, Jiangsu Hengrui Pharmaceuticals, a drug manufacturer, and Foshan Haitian Flavouring and Food, a condiments manufacturer, were approved by the CSRC for Hong Kong listings after submitting their Hong Kong listing applications in January. According to sources, Haitian and Hengrui could seek to raise US$1.5 billion and US$2 billion, respectively.
