With 2Q21 coming to an end, the Hong Kong IPO market has shown no signs of recovery. Investors and issuers remain a world apart in terms of valuation expectations, making it difficult to print shares.
This is eroding market momentum across sectors.
From 1 April to 27 May, Hong Kong IPOs totaled a mere USD 5.2bn, a far cry from 1Q’s USD 18.6bn. The usual summer lull seems to have started way earlier.
The primary market will only reopen in a meaningful way if valuations come down to a level that reflects the key investor concerns: China’s tighter scrutiny of its big tech companies, unsettling US-China ties, growing chances of an interest rate hike in the US.
Just to show how bad 2Q has fared so far, of the 8 tech IPOs YTD, only one was priced in 2Q. The same happened to the healthcare sector, where only 1 out of the 6 IPOs YTD was priced in 2Q. For the year to 27 May, we had 21 Hong Kong IPOs.
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- After a very disappointing 2Q, are we at - close to - the bottom? What could trigger a reopening of the IPO market in Hong Kong?
- Based on conversations with clients (issuers), do bankers think their clients have become more realistic in terms of valuations?
- What could we learn from Kuaishou and New Horizon IPOs (the best in terms of first day performance in 1H)? Many of the secondary listings of US listed Chinese companies did relatively poorly on the first day of trading?
- Any particular names/sectors to look forward to in 2H?
- Preparation is the edge for successful IPOs. Dos and Donts from experts.
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