Caixin Weekly | A Warming Trend for Hong Kong Stock Market IPOs (AI Translation)
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文｜财新周刊 王小青 发自香港
By Caixin Weekly's Wang Xiaoqing, reporting from Hong Kong
文｜财新周刊 王小青 发自香港
By Wang Xiaoqing, Caixin Weekly, Reporting from Hong Kong
临近2024年年尾，中国美妆品牌毛戈平（01318.HK）于12月10日登陆香港交易所（下称“港交所”），上市首日股价大涨77%，令打新成功的投资者一片欢腾——每手账面赚2280港元。
As the end of 2024 approaches, Chinese beauty brand Mao Geping (01318.HK) made its debut on the Hong Kong Stock Exchange (referred to as "HKEX") on December 10. On its first trading day, the stock price surged by 77%, bringing great joy to those who successfully participated in the IPO, with each lot yielding a paper profit of 2,280 HKD.
2024年，港股IPO市场迎来了久违的回暖。国际会计师事务所毕马威最新预计，港交所全年共有63家公司首次公开募股（IPO），集资金额累计约830亿港元，同比上升近80%。港交所IPO集资额排名也因此“重上”全球第四。
In 2024, the Hong Kong stock market for initial public offerings (IPOs) has experienced a long-awaited recovery. According to the latest estimates from international accounting firm KPMG, a total of 63 companies are expected to go public on the Hong Kong Stock Exchange this year, raising approximately HK$83 billion, reflecting a near 80% increase year-on-year. Consequently, the Hong Kong Stock Exchange’s ranking for IPO fundraisings has once again climbed to fourth place globally.
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- Mao Geping's stock surged by 77% on its Hong Kong Stock Exchange debut, reflecting a broader IPO market recovery in Hong Kong during 2024, with 63 companies expected to raise HK$83 billion.
- Mega IPOs like Midea Group's listing, raising HKD 35.7 billion, marked a turning point, with policy support enhancing Hong Kong's appeal as an IPO destination, especially for mainland enterprises.
- The Hong Kong market saw a transformation in IPO issuer composition, with increased cornerstone investors and companies using Hong Kong for global expansion, amidst strategic alignment with China’s economic policies.
In late 2024, the Chinese beauty brand Mao Geping listed on the Hong Kong Stock Exchange, marking a significant event as its stock surged 77% on the first trading day, yielding substantial profit for IPO participants. [para. 1] The Hong Kong IPO market experienced a recovery, with an estimated 63 companies going public and raising approximately HKD 83 billion, marking an 80% increase from the previous year. This resurgence follows a 2023 decline where poor market sentiment resulted in only HKD 46.3 billion raised despite 73 new listings. [para. 2][para. 4] Encouraging developments included the listing of Midea Group (raising over HKD 30 billion in September 2024) and several other large IPOs, further strengthening the market's perception. [para. 3][para. 5]
The market revival was supported by policy moves, including rate cuts by the Federal Reserve and stimulus measures from China. These actions facilitated Hong Kong stocks in emerging from a four-year decline, as illustrated by the Hang Seng Index rising 20%. [para. 6][para. 7] Policies introduced by the China Securities Regulatory Commission have bolstered collaboration between Chinese mainland and Hong Kong capital markets, supporting mainland enterprises in listing in Hong Kong. [para. 7]
Despite positive signs, uncertainties loom, especially considering upcoming U.S. tariff plans on China and the geopolitical impacts that could challenge Hong Kong's stock market's sustainability. [para. 8] Nicolas Aguzin, CEO of the Hong Kong Exchanges and Clearing Limited, highlighted Midea Group's successful IPO as a template for other mainland companies. It successfully raised HKD 35.7 billion, with shares rising significantly post-listing. [para. 9][para. 12][para. 13] The presence of cornerstone investors, often state-owned, has increased, denoting heightened confidence and support for Hong Kong's capital market development. [para. 16]
Hong Kong's local institutions have streamlined the listing approval process, making it more attractive for companies seeking "A-shares first, then H-shares" listings. Such strategic enhancements potentially facilitate quicker IPO approvals. [para. 18] However, the general IPO market trajectory remains complicated, with various international investment banks undergoing layoffs amid decreased trading activity. [para. 23][para. 28]
Looking ahead, accounting firms EY and KPMG predict heightened activity in the Hong Kong stock market's IPOs by 2025, fueled by lower U.S. interest rates, improved sentiment toward Hong Kong assets, and strategic government support. These developments are expected to place Hong Kong once again among the top three global exchanges in IPO fundraising. [para. 34] Moreover, the Hong Kong Exchange seeks to attract overseas companies by enhancing its international presence and expanding initiatives like the Stock Connect scheme, paving the way for increased Middle Eastern and Southeast Asian company listings. [para. 41][para. 44] Despite challenges, the Hong Kong Stock Exchange anticipates greater participation from foreign capital, bolstering the IPO market's future growth as it continues to provide a robust offshore financing platform for Chinese enterprises. [para. 46][para. 50]
- Marie Dalgar
- The article mentions that Chinese beauty brand Marie Dalgar (毛戈平, 01318.HK) went public on the Hong Kong Stock Exchange on December 10, 2024. On its first day of trading, the stock price surged by 77%, providing investors with a profit of 2,280 HKD per lot.
- KPMG
- According to the article, KPMG estimates that 63 companies will conduct IPOs on the Hong Kong Stock Exchange in 2024, with a total fundraising amount of approximately 83 billion Hong Kong dollars, marking a nearly 80% year-over-year increase. This resurgence in the IPO market has propelled the Hong Kong Stock Exchange back to the fourth position globally for IPO fundraising. KPMG's assessment underscores a significant market recovery following a downturn in 2023.
- Midea Group
- Midea Group (000333.SZ/00300.HK) successfully listed on the Hong Kong Stock Exchange in September 2024, raising 357 billion HKD. The IPO was seen as a market turning point, and its share price increased by around 40% by December 12. The listing is part of China's initiative to support domestic industry leaders in listing in Hong Kong to bolster international presence, with plans to allocate funds for global R&D and improving overseas sales networks.
- SF Holdings
- SF Holdings successfully listed on the Hong Kong Stock Exchange in November 2024, following Midea Group's example. The company is part of the trend where leading mainland enterprises are encouraged to list in Hong Kong. On the day of its listing, Chairman Wang Wei stated the significant importance of the Hong Kong platform for SF Holdings' international market development.
- China Resources Beer
- The article mentions China Resources Beverage (02460.HK) as one of the three companies that had successful IPOs in October and November 2024 on the Hong Kong Stock Exchange, each with fundraising amounts exceeding HKD 5 billion.
- Horizon Robotics
- Horizon Robotics (09660.HK) is one of the companies that successfully went public on the Hong Kong Stock Exchange in 2024, with an IPO raising over 50 billion HKD. It was part of a broader IPO market recovery in Hong Kong, which gained momentum following high-profile listings like that of Midea Group.
- Li Du Liquor
- In 2023, Li Du Liquor (06979.HK) was the only company among new listings in Hong Kong to raise more than HKD 5 billion, with an approximate fundraising amount of HKD 5.3 billion.
- Joyson Electronics
- Joyson Electronics, a leading auto parts company listed on the Shanghai Stock Exchange (600699.SH), announced plans in December 2024 to issue H-shares and list on the Hong Kong Stock Exchange. This move aligns with the trend of mainland Chinese industry leaders pursuing "A+H" dual listings as the Hong Kong IPO market experiences a revival, supported by Chinese policy initiatives promoting such listings.
- Hengrui Medicine
- Hengrui Medicine, a leading pharmaceutical company in China's A-share market, announced in December 2024 its plans to issue H-shares for listing on the Hong Kong Stock Exchange. This move is part of a growing trend of mainland Chinese industry leaders pursuing "A+H" listings, as supported by Chinese policies encouraging leading domestic firms to seek additional capital in Hong Kong.
- Haitian Flavouring
- In December 2024, Haitian Flavouring (603288.SH), a leading Chinese condiment company, announced plans to issue H-shares and list on the Hong Kong Stock Exchange. It joins other prominent domestic companies pursuing a "first A-share, then H-share" strategy, reflecting a trend among major Chinese firms to list in Hong Kong.
- CATL
- The article mentions that CATL (Contemporary Amperex Technology Co., Limited), a leading battery manufacturer, is reportedly planning to follow the "A+H" listing trend by listing its shares on the Hong Kong Stock Exchange. This reflects a broader movement of established Chinese companies choosing to list in Hong Kong after their initial A-share listings on mainland Chinese stock exchanges.
- Dongpeng Beverage
- Dongpeng Beverage, a leading energy drink company in China, is reportedly planning to pursue a "A+H" listing, indicating its intention to be listed both on mainland China's A-shares market and Hong Kong's H-shares market. This is part of a growing trend among Chinese companies to list on the Hong Kong Stock Exchange following their A-shares debut.
- JD Industrial
- JD Industrial, a spinoff from JD Group, has been waiting the longest for overseas listing approval from the China Securities Regulatory Commission (CSRC). As of December 5, 2024, its process has taken 608 days. The company filed its initial application to the Hong Kong Stock Exchange on March 30, 2023, let it expire, and later refiled on September 30, 2024.
- UBTECH Robotics
- UBTECH Robotics, known as Hong Kong's "first humanoid robot stock," was listed at the end of 2023. Between August and November 2024, UBTECH conducted three separate share placements, raising a total of HKD 10.82 billion, surpassing its initial IPO amount of HKD 10.42 billion. This indicates the company's ability to raise additional capital post-listing.
- L'Occitane
- L'Occitane, the first French company to list on the Hong Kong Stock Exchange (HKEX), has since delisted in 2024. At the time of its initial listing in 2010, the main board price-to-earnings (P/E) ratio of the HKEX was approximately 17 times. However, it is noted that the current main board P/E ratio is now less than 12 times.
- Before 2023：
- The absence of large IPOs led to only HKD 46.3 billion being raised in Hong Kong's IPO market
- January 1, 2022：
- Hong Kong introduced the special purpose acquisition company (SPAC) listing mechanism
- March 31, 2023：
- New regulations for outbound listings by mainland enterprises came into effect
- April 2024：
- The China Securities Regulatory Commission introduced "five beneficial measures for Hong Kong"
- September 6, 2024：
- Midea Group priced its shares at a discount relative to its Shenzhen Stock Exchange closing price
- September 9-12, 2024：
- Midea Group commenced its initial public offering in Hong Kong
- September 17, 2024：
- Midea Group successfully went public on the Hong Kong Stock Exchange
- September 19, 2024：
- The Federal Reserve officially restarted its rate-cutting cycle
- September 24, 2024：
- China announced a series of economic stimulus policies
- September 30, 2024：
- JD Industrial resubmitted its listing application to the Hong Kong Stock Exchange
- October 2024：
- The first SPAC merger transaction (De-SPAC) was completed; CSRC declared focus on expediting overseas listing approvals
- November 2024：
- SF Holding succeeded in its Hong Kong listing; He Lifeng reiterated government support for listings in Hong Kong
- December 5, 2024：
- The CSRC was processing 135 overseas listing projects; JD Industrial's filing reached 608 days
- December 10, 2024：
- Mao Geping made its debut on the Hong Kong Stock Exchange
- December 12, 2024：
- The Hang Seng Index rose by 20% from the beginning of the year
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