Blockbuster initial public offerings (IPOs) in the United States and the lack of any good listings have combined to see the Hong Kong Stock Exchange (HKEX) drop to third place in this year's global IPO rankings. Based on total proceeds, the HKEX was overtaken by the New York Stock Exchange (NYSE) and NASDAQ in the first five months of 2019.
One of the most obvious reasons for the drop in rank was a slew of recent IPOs in the United States by tech startups that brought in billions of dollars in new investments. This included the recent IPO of ride-hailing tech giants Lyft and Uber.
At the top spot, at least for the first half of the year, is the NYSE. The exchange took the position with a gain of $15.9 billion between January and May. The NYSE currently holds around 29.5 percent of the global equities market. Its lead can mostly be attributed to the recent Uber IPO, which brought in more than $8.1 billion.
NASDAQ took the second spot thanks to Lyft's IPO in March, which managed to raise more than $2.5 billion. NASDAQ, which is mostly comprised of tech equities, managed to raise $11 billion from January to March; representing 20.6 percent of the global market.
The HKEX, one of China's largest exchanges, previously held the title as the top IPO market in the work six times in the past decade. Given the recent turn of events, particularly China's ongoing trade war with the United States, the HKEX's appeal to foreign corporations has fallen significantly.
As the economic outlook remains uncertain given the geopolitical climate, foreign firms have steered away from the exchange, which was once heralded as the best destination in Asia.
In the first five months of 2019, the HKEX managed to raise only around $5.87 billion, representing around 10.9 percent of the global market. One of the biggest IPOs on the exchange this year was from the brokerage firm Shenwan Hongyuan Group, which raised $1.16 billion during its debut.
The exchange ranked at the top spot at the start of the year but was then moved to second place after Lyft's IPO. It then dropped another stop following Uber's IPO last month.
According to market analysts, HKEX could continue to drop in rank as the trade dispute continues to tarnish its reputation. The negative and bearish sentiment towards the exchange could drive away any new IPOs this year.
Analysts believe that the exchanges' future could very well lie in the outcome of the negotiations between the United States and China and that it would have to work harder to attract any big listings this year. Some Chinese companies have even decided to abandon listing on the Hong Kong exchange. Just this year, 15 Chinese companies had decided to make their debut on NASDAQ.
