Jun 19, 2024 04:17 AM
FINANCE
KPMG Cuts Hong Kong IPO Forecast by 40% Blaming Fed Rate Cuts Delay
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The Hong Kong Stock Exchange ranked 10th globally in terms of IPO fundraising in the first half.
KPMG downgraded its expectations for Hong Kong’s initial public offering (IPO) market this year, citing a global decline in dealmaking.
The accounting and consulting firm now expects up to 80 new listing, raising a total of HK$60 billion ($768 million), down 40% from its earlier estimate.
In the first half of 2024, the Hong Kong IPO market raised a total of HK$11.6 billion across 27 deals, representing a decrease of 35% and 15% in funds and deal volume compared with the first half of 2023.
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- KPMG reduced its IPO market forecast for Hong Kong to HK$60 billion for 2024, down 40% from its original estimate due to global dealmaking declines.
- In the first half of 2024, Hong Kong raised HK$11.6 billion from 27 deals, a 35% decrease in funds compared to the same period in 2023.
- Despite challenges, positive signs such as increasing IPO applicants suggest potential pick-up in activities, with notable new listings including QuantumPharm Inc. raising HK$1.13 billion.
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Who’s Who
- KPMG
- KPMG downgraded its expectations for Hong Kong’s IPO market this year, citing a global decline in dealmaking. It now forecasts up to 80 new listings raising HK$60 billion ($768 million), down 40% from earlier estimates. Despite a slow start, KPMG sees positive signs for a pick-up in IPO activities later this year. KPMG's Louis Lau pointed out uncertainties in attracting sufficient investor participation, but noted an increase in IPO applications from January to June 2024.
- Ernst & Young (EY)
- Ernst & Young (EY) maintains its estimate for Hong Kong IPOs at HK$50 billion and expects the Hong Kong Stock Exchange to reclaim its top five IPO bourses ranking. EY's Asia-Pacific IPO Services Director, Ringo Choi, suggests the market may improve in the second half of the year, partially due to regulatory tightening in the A-share market. EY is cautious about large new listings, noting companies seeking over HK$5 billion are unlikely to proceed until market conditions improve.
- Deloitte
- The article mentions that at the start of the year, Deloitte, along with PwC and KPMG, expected Hong Kong’s IPO market to rebound to HK$100 billion. However, this figure now seems unattainable due to factors like the U.S. Federal Reserve's delayed interest rate cuts and current market conditions.
- PwC
- The article does not provide specific information about PwC's activities in relation to the Hong Kong IPO market. However, it mentions that at the beginning of the year, PwC, along with Deloitte and KPMG, expected Hong Kong's IPO proceeds to rebound to HK$100 billion, although recent developments have made this target seem unattainable.
- ChaBaiDao
- ChaBaiDao, a Chinese bubble tea chain, conducted the largest IPO in the first half of 2024 in Hong Kong, raising approximately HK$2.5 billion. This marked a significant moment in the IPO market amid a general decline in funds raised.
- QuantumPharm Inc.
- QuantumPharm Inc. is a Shenzhen-based AI drug researcher backed by Tencent Holdings Ltd. It debuted on June 13 as the first IPO under the Chapter 18C listing rules in Hong Kong, raising HK$1.13 billion.
- Black Sesame Technologies
- Black Sesame Technologies is an AI specialist company that has submitted its Chapter 18C IPO application and passed the listing hearing on June 12. The company is expected to be one of the anticipated Chapter 18C IPOs this year, as suggested by EY and KPMG.
- Tencent Holdings Ltd.
- Tencent Holdings Ltd. is a Chinese multinational conglomerate known for its investments in various technology sectors, including AI. The company backed QuantumPharm Inc., an AI drug researcher, which debuted as the first Chapter 18C IPO in Hong Kong, raising HK$1.13 billion.
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What Happened When
- By the first half of 2024：
- Hong Kong IPO market raised a total of HK$11.6 billion across 27 deals.
- January to June 2024：
- The number of listing applications processed showed a steady increase, with monthly figures rising from 68 in January to 106 in June 2024.
- June 12, 2024：
- Black Sesame Technologies passed the listing hearing for its Chapter 18C IPO application.
- June 13, 2024：
- EY maintained its estimate for Hong Kong IPOs at HK$50 billion.
- June 13, 2024：
- QuantumPharm Inc. debuted as the first Chapter 18C IPO, raising HK$1.13 billion.
- June 18, 2024：
- KPMG said there are positive signs for a pick-up in Hong Kong IPO activities for the latter half of 2024, despite a slow start.
- June 18, 2024：
- Louis Lau explained that the anticipated HK$100 billion IPO proceeds this year seemed unattainable.
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