Hong Kong’s IPO market still lags behind other exchanges

In the global race to host initial public offerings, there has been a notable laggard this year — Hong Kong.

The Asian financial hub has ranked first in IPO fundraising for four out of the past seven years. But the most recent year it did so was in 2019. And this year it has failed to even make it into the top 10 global exchanges.

For a place that used to cite its IPO rankings as a sign of its vitality as a financial centre, it has been quite a come down, even in a global financial system where the value of IPOs has fallen 70 per cent in the first five months of the year. It is a decline felt particularly hard by the territory’s bankers and financial advisers as the flow of deals in general has dried up.

One Hong Kong tycoon described the current dealmaking environment as “the worst it’s been . . . it doesn’t have that ‘boom boom boom’ all the time any more”.

Data from Dealogic show funds raised by new listings in the city are down about 90 per cent in the year to date at just $2.4bn, marking the worst half-year haul since the depths of the global financial crisis.

The stockmarket’s benchmark Hang Seng is down about a third from highs last year while technology stocks listed on the exchange have fared even worse, dropping about 55 per cent despite a recent rally by the likes of Alibaba and Tencent.

The central problem is that for most of the past decade, bourse operator Hong Kong Exchanges and Clearing has focused overwhelmingly on attracting…