Disorder in Hong Kong has not disrupted the IPO market—yet.
While protestors have been storming Hong Kong’s legislature, high-tech firms are taking the local market by storm, fueling a boom in IPOs.
A June report from KPMG China noted that in the first half of 2019 Hong Kong ranked third globally by total funds raised, after the New York Stock Exchange and Nasdaq. HK$69.2 billion (US $8.85 billion) was raised on the main board across 68 new listings, the highest ever for the first six months of the year. Total proceeds for the period were the highest since 2016. KPMG predicts the boom will accelerate, with Hong Kong’s IPO market taking in more than HK$200 billion for 2019.
IPO activity in the special administrative region has been bolstered by reforms that make it easier for “new economy” companies—meaning high-growth technology firms—to list. “New economy as a sector needs time to establish itself, and this is where global venture capital and private-equity managers can seize the benefit of Hong Kong as a regional fund-management center,” Irene Chu, head of New Economy and Life Sciences at KPMG China, said in a statement.
Innovation and technology firms accounted for more than 37% of IPOs in the first six months of the year. More are expected in mainland China too. China’s new STAR Market, which targets tech firms, has a pipeline of 124 companies for the third quarter of 2019, KPMG noted.