Travel & Destination
Tech firms are discovering Hong Kong as an IPO destination, but is it too late for the city to capture up?
Hong Kong's stock market has actually seen a flurry of fundraising this year by technology and internet companies, with 5 of the city's 10 biggest going publics occupied by companies in the brand-new economy, compared to none last year.Most of these listings got overwhelming action from financiers, who overbought the new shares by several hundred times the number of shares on offer.Listings by bank and securities companies, traditionally the
staples of Hong Kong's capital market, have halved to 30 per cent of this year's top IPOs, from 60 percent in 2015, in line with regulators' objective to draw more brand-new economy firms to float.Among the internet stars, ZhongAn Online P&C Insurance, China's first online-only insurer backed by Alibaba affiliate Ant Financial Services Group, Tencent Holdings, and Ping An Insurance, was the first to shine. Hong Kong's biggest fintech listing to date raised HK$ 11.9 billion(US$ 1.52 billion ), and its shares have increased almost 17 per cent because its September 28 launching, closing at HK$ 69.75 on Friday.Alibaba. owns the South China Early Morning Post."ZhongAn's IPO has triggered a wave of interest towards tech listings,"said Victor Au, primary operating officer for Delta Asia Securities."It sort of opened eviction for a tech IPO rush in the fourth quarter."ZhongAn's halo effect as the very first fintech IPO and its ongoing cost increase given that its launching had encouraged more companies and banks to promote their new share sales, and priced them at a higher
level, said Cheng Ka-wa, director for RHB Securities Hong Kong.ZhongAn's IPO has triggered a wave of enthusiasm towards tech listings Victor Au, Delta Asia Securities China Literature was the web star that burned the brightest. China's biggest online publishing and e-book site, an unit of Tencent, saw its
new shares oversubscribed by 625 times and attracted more than HK$ 520 billion
of investors 'capital, making it the
hottest IPO because 2008. On its first trading day on November 8, China Literature skyrocketed 86 percent in value, the greatest debut-day surge among significant IPOs this year. The stock closed at HK$ 89.90 on Friday, up 63 percent from its IPO cost of HK$ 55. The 2 listings that followed-- video gaming gadget maker Razer and China's biggest online car retailer, Yixin Group, attracted a financier need of 290 and 560 times respectively for the variety of shares on offer.Such response was a contrast to the 2016 climate, when half of the leading 10 offerings-- all which were financial companies-- did not get sufficient subscription for their shares. Although Razer and Yixin's first-day boosts of 18 percent and 5 per cent respectively lagged China Literature's 86 per cent launching rise, it was not a signal of the IPO market cooling off, said Alex Wong, director of possession management at Ample Financial Group."The investor belief might have been impacted by recent hot tech IPOs, where shares rose at first in the middle of interest, but then when the craze declined, the stock price drew back and the trading turned more quiet." Wong stated Hong Kong financiers were relatively brand-new to new economy listings and were discovering as these listings began stream.Still, the public's enthusiasm could be stired if there are new"strong names"concerning
list in Hong Kong, contingent on the specific company's basics and development outlook, he added.The tally so far in Hong Kong's listings run is US$ 14.8 billion, making it fourth among global stock exchange where business come to raise capital, inning accordance with
Dealogic. With a month to precede the year's end and with no blockbuster sales in the pipeline, Hong Kong looks unlikely to match in 2015's HK$ 195 billion raised, or catch up with Shanghai or the New York Stock Exchange on the top of the international IPO rankings.Companies have actually raised US$ 32.3 billion so far on the New york city bourse, followed
by US$ 18.4 billion in Shanghai and US$ 15 billion on the Nasdaq.If Hong Kong continues to fall back by the end of next month, it will be the very first time that Shanghai surpasses it in the annual IPO ranking.Still, the development of innovation and internet stocks in Hong Kong was the beginning of a great pattern, stated Au of Delta Asia Securities."The heating up of Hong Kong's IPO beliefs may bring in more big names to think about listing in the city next year," he said.Investors might anticipate a continued rebound in IPO activities for 2018, especially with possible listings of China's new economy companies in the technology, consumer, and health care sectors, Au said.The financier belief might have been affected by recent hot tech IPOs ... when the frenzy declined, the stock rate pulled back and the trading turned more peaceful Alex Wong, Ample Financial Group Tencent is thinking about a 2018 IPO for its music streaming service that might raise a minimum of US$ 1 billion, which could happen
in Hong Kong or New York, according to a previous report by Bloomberg.Tencent's Hong Kong-listed stocks have actually skyrocketed more than 120 percent in 2017, with its market value going beyond US$ 500 billion to become the first Chinese tech firm to sign up with a worldwide elite club that includes United States tech giants Apple, Alphabet, Amazon, Microsoft, and Facebook.This year's reasonably weaker IPO market
with less mega IPOs compared with 2016, analysts stated, signified Hong Kong's change into a more mature capital market, which also caters to the funding needs of smaller sized business with growth capacity."Hong Kong's IPO
market has plainly diversified in its function not simply as a preferred listing destination for blue-chips and big Chinese service or state-owned enterprises, however also a fundraising place for possibly high-growth local and worldwide small and medium [sized] business,"stated Edward Au, co-leader of the national public offering group for Deloitte China.Deloitte anticipated Hong Kong to see a rise in the variety of new listings, however a drop in the funds raised for 2017, inning accordance with its previous projection at the end of September.The number of brand-new listings in Hong Kong has actually reached 131 so far this year, up from 99 during the very same period in 2016, inning accordance with most current data assembled by Dealogic.