Accounting firm PricewaterhouseCoopers has claimed that Hong Kong will still continue to rank among the top three IPO destinations in the world this year. It also predicted that more than 180 companies are likely to choose the city to launch their IPO this year, with an estimated combined value of over $33.4 billion.
The report, titled "IPO Market Year-End Review for 2019 and Outlook for 2020," broke down the IPO expectations for the various capital markets for the coming year. However, the report's prediction for Hong Kong's performance for the year is 17.6 percent lower than the city's performance last year. Hong Kong managed to rise more than HK$315.5 billion in 2019, its highest amount raised since 2010.
Despite the slightly lower expectation, the forecast was in line with the city's average volume over the past decade. Analysts have stated that Hong Kong remains to be a very competitive location for global corporations looking to raise new capital.
PWC partner, Eddie Wong, pointed out that the various reforms and measures taken by the government to enhance the city's financial market have managed to solidify its position. These measures include the city's wide listing regulation reform in 2018; its recently imposed weighted voting rights, and its biotech listing regulation reforms.
The numerous enhancements to operations and regulations have all managed to enhance and diversify Hong Kong's capital market, laying a foundation that places it right up with other global leaders in the space such as the New York Stock Exchange and the NASDAQ.
China's wider opening-up measures have also managed to attract foreign companies to list their shares in the city. Last year, a total of 23 foreign companies were able to successfully list their shares in Hong Kong. That number is expected to grow even further as the government continues to roll out new measures that aim to further improve the capital market environment to foreign firms.
The founder of Oriental Patron Financial Group, Jeffery Chap Lap-Tak, warned that Hong Kong would still have to work hard to retain its crown in 2020. One of the ways that it can ensure its reign will be to focus more on attracting giant companies. Hong Kong currently has around 10 companies that have applied for IPOs, with launches expected in the first quarter. Unfortunately, the IPOs are relatively small and will only contribute a small amount towards the city's targets.
Hong Kong will likely need to focus on US-listed tech giant and other foreign institutions. These will include companies that have existing listings and those that have yet to go public. A good example would be Alibaba's massive secondary listing in Hong Kong last year. Alibaba managed to raise $12.9 billion during its secondary listing, propelling Hong Kong into the top spot in last year's rankings.
