Recent economic data shows that Hong Kong is on pace for the biggest economic slowdown on record, with exports fell 9.7% and retail sales falling 34% year on year. However, the IPO market seems unaffected.
Despite market uncertainties caused by the pandemic, Chinese Mainland and Hong Kong initial public offering (IPO) markets remained resilient in the first quarter of 2020, according to a report released by Deloitte China's National Public Offering Group last month.
The number of Hong Kong IPO deals matched its first-quarter 2019 level. “As of 31 March 2020, Hong Kong had recorded HKD$14.1 billion in proceeds raised from 37 new listings,” the report said. “This represents a fall of about 31 percent from the HKD$20.4 billion raised in Q1 2019, although the number of IPOs was the same.”
"Hong Kong's capital market has again demonstrated its ability to weather challenges while driving fundraising activity. Although its IPO funds dwindled, its number of new listings was 1st among all stock exchanges in Q1 2020," comments Edward Au, Deloitte China Southern region managing partner and co-leader of the National Public Offering Group.
Looking ahead, the report predicts that Hong Kong will have about 160 IPOs raising from HKD$160 billion to HKD$220 billion for the full year. New listings from life science, pharmaceutical, biotech and TMT companies will continue to be the market spotlights.
Yesterday, Hong Kong recorded no new locally transmitted coronavirus infections during the one full quarantine period, which marked the city's success in restraining the pandemic. Whether this is the end of the pandemic for Hong Kong and what is the full impact on its economy remain unknown.