Hong Kong's IPO Market: A Flurry of Year-End Listing Plans
Tuesday, Dec 31, 2024 4:04 am ET
4min read As the year 2024 draws to a close, Hong Kong's IPO market is witnessing a surge in listing plans, with several large deals in the pipeline. This article explores the factors driving this trend and the potential impact on the market's performance.
One of the most notable listings in Hong Kong this year was the $4 billion IPO of Midea Group, a Chinese home appliance manufacturer. The listing, which took place in September, was the largest since Kuaishou Technology's $6.2 billion IPO in early 2021. Midea's Hong Kong-listed shares jumped almost 8% from its offer price on the first day of trading, vindicating the company's decision to price at the top of the range and increase the size of the share sale by 15%. The listing was also a positive sign for the city's capital markets, indicating that the worst of the drought may be coming to an end (Bloomberg).
The Hong Kong IPO market saw a significant recovery in the second half of 2024, driven by sizeable IPO deals. According to KPMG's Chinese Mainland and Hong Kong IPO Markets 2024 Q3 review, Hong Kong is expected to rank fourth globally in terms of IPO funds raised in 2024, reclaiming its position among the top five global IPO markets. This performance underscores improved investor confidence, generating positive momentum that is expected to continue into 2025. The city raised HKD 82.9 billion across 63 deals in 2024, marking a 78% increase in funds raised compared to 2023.
The US Fed's interest rate cuts and China's economic stimuli significantly influenced the Hong Kong IPO market's momentum in 2024. According to Deloitte China's 2024 review and 2025 outlook, the Hong Kong IPO market started to pick up in September 2024, following the US Fed's first interest rate cut in four years and China introducing economic stimuli. This momentum is expected to continue into 2025, with another US interest rate cut and more Chinese economic stimuli planned. The report states, "The Hong Kong IPO market started to pick up in September 2024 with a mega listing and upon the US Fed cut its interest rate for the first time in four years and China introduced economic stimuli. Its momentum is expected to pick up further in 2025 when the US makes another interest rate cut, and more Chinese economic stimuli are introduced." (Deloitte China, 2024)
In conclusion, Hong Kong's IPO market is experiencing a flurry of year-end listing plans, driven by large deals such as the Chinese home appliance group and beverage company listings. The US Fed's interest rate cuts and China's economic stimuli have played a crucial role in boosting the market's momentum. As investors and companies continue to capitalize on these favorable conditions, the Hong Kong IPO market is poised for a strong finish to 2024 and a promising start to 2025.
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