A better year expected for IPO bankers as Hong Kong claws its way back into top 10 markets

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After a satisfying year for investment bankers in Hong Kong, who helped lift the city back into the top 10 ranking in initial public offerings (IPOs) worldwide, the new year could be merrier as Hong Kong Exchanges and Clearing (HKEX) prepares for more market debutants.

Companies and investors raised US$11 billion from 64 first-time stock offerings on the main board, according to data compiled by the London Stock Exchange Group, making it the fifth busiest IPO venue. India’s two main exchanges and US bourses Nasdaq and New York Stock Exchange (NYSE) topped the league table.

Tokyo, Saudi Exchange, Abu Dhabi, Madrid and the ChiNext board in Shenzhen completed the top 10 venues.

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Proceeds from Hong Kong IPOs surged 87 per cent from a year earlier, boosted by Midea Group’s HK$35.6 billion (US$4.6 billion) deal in September, the world’s second largest IPO in 2024. US real estate firm Lineage’s US$5.1 billion Nasdaq IPO and Hyundai Motor India’s US$3.3 billion rounded out the top three offerings.

Visitors at the Midea booth during an expo in Beijing in 2017. Photo: Shutterstock alt=Visitors at the Midea booth during an expo in Beijing in 2017. Photo: Shutterstock>

It’s been a “satisfactory” year, said Louis Wong, the executive director of Phillip Capital Management. “The IPO market will continue to fare well next year with policy support from [mainland Chinese regulators] and an easier interest-rate regime.”

IPO bankers will look back at 2024 with relief, after plodding on with smallish deals through the halfway mark when it ranked 13th, a two-decade low. By the end of today, however, the local stock exchange would have completed its first positive year since 2019 in terms of proceeds raised.

China Merchants Bank topped the list of bookrunners with 37 deals involving US$1.1 billion, while China International Capital Corp was credited with 23 deals involving US$950.3 million, according to LSEG. Huatai Securities ranked third with 16 deals that raised US$892.8 million.

UBS was the busiest among all international investment banks, after handling 21 deals that raised US$736.5 million of proceeds.

The listing for Chinese EV battery king Contemporary Amperex Technology in Hong Kong will be a market highlight in 2025. Photo: Reuters alt=The listing for Chinese EV battery king Contemporary Amperex Technology in Hong Kong will be a market highlight in 2025. Photo: Reuters>

Investors will also be closely monitoring how Beijing’s various monetary and fiscal stimulus measures will spur the economy, particularly in boosting consumption and exports, according to Edward Au, managing partner for the southern region at Deloitte China.

“IPO candidates in the consumer sector are optimistic about leveraging these incentives to capitalise on growth opportunities and boost their business performance,” he said. “They are actively seeking fundraising opportunities to fuel their ambitious expansion plans.”

As more Chinese companies look to expand globally, Hong Kong’s capital markets become a natural choice for fundraising, he added.

IPO proceeds could increase 70 per cent to HK$150 billion in 2025, according to a Deloitte forecast. IPOs by Chinese companies will contribute a significant portion of the volume to build on the recent momentum in such deals, it said.

Globally, fundraising rose 0.4 per cent to US$120.2 billion in 2024, according to LSEG, little changed from a year ago. The National Stock Exchange in India hosted 261 deals involving US$19.5 billion of proceeds, while the Bombay Stock Exchange had 147 IPOs with US$17.32 billion.

Some 117 companies chose Nasdaq to raise US$17.03 billion, while the NYSE completed 32 deals involving US$16.27 billion of proceeds.

The ChiNext was the best performer among mainland bourses with US$2.94 billion of proceeds. In Shanghai, the stock exchange’s main board came 18th, with 17 IPOs and US$2.16 billion of proceeds. The Star Market ranked 24th, having seen 14 new listings raise US$1.5 billion.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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