A woman sits in front of Exchange Square (left) which houses the Hong Kong Stock Exchange in Hong Kong on April 27, 2022.

Despite falls in both the volume and value of Hong Kong’s new listings for the first three quarters, the city’s initial public offering market is forecast to pick up in the fourth quarter boosted by regulatory reforms and closer financial links with the Chinese mainland market, Deloitte said on Wednesday.

According to the firm, Hong Kong is expected to record about 47 new listings involving HK$54.7 billion ($6.97 billion) by the end of September, a 36 percent drop in the number of IPOs and an 81 percent decline in funds raised compared with the same period last year.

Driven by two mega listings in July and August, Hong Kong’s capital market’s position has risen again to become the world’s fourth largest IPO venue in the third quarter of 2022

Robert Lui, Deloitte

The firm said complex geopolitical tensions and US interest rate hikes accounted for the drop in the number of new listings in Hong Kong. 

Nevertheless, the sentiment in Hong Kong’s capital market has improved, and its position has risen again to become the world’s fourth largest IPO venue in the third quarter of 2022, driven by two mega listings respectively in July and August, said Robert Lui, southern region offering services leader and Hong Kong offering leader of the capital market services group at Deloitte China.

Deloitte estimated that the city will have seen 70 new listings raising at least HK$110 billion by the end of this year, support by a pipeline of more than 140 listing applications covering China concept stocks, biotech companies, and a few potentially jumbo listings from the energy and resources, financial services, and retail sectors.

It also forecasts that Hong Kong's position in the global IPO rankings will rise to third place by the end of 2022 as the mainland launches more measures to enhance financial ties with Hong Kong Special Administrative Region and improve investor sentiment regarding the whole market.

“The expanding connectivity with the Chinese mainland through the potential Southbound Stock Connect with renminbi settlement, and inclusion of overseas issuers in the Stock Connect will enhance Hong Kong’s attractiveness as an international IPO venue,” said Edward Au, southern region managing partner at Deloitte China.

“It will also help Hong Kong to better complement with the mainland capital market for seizing more financing opportunities for both markets in the longer run, and strengthen Hong Kong’s prominent role in helping the internationalization of renminbi,” he added.

Contact the writer at aoyulu@chinadailyhk.com