Hong Kong's IPO market sees solid investor demand and reaches record high in total proceeds for H1 2021, finds KPMG analysis

Supported by strong liquidity, homecoming listings and sizeable deals, Hong Kong’s IPO market was buoyed by solid investor demand and market sentiment, and reached a historic high in terms of total proceeds for the first half of 2021.

Total funds raised reached USD26.0 billion, according to KPMG’s latest analysis. The Hong Kong Exchange currently ranks third among the top 5 stock exchanges, and the Shanghai Stock Exchange follows with USD20.6 billion in IPO proceeds.

KPMG’s 2021 mid-year review of Mainland China and Hong Kong IPO markets shows that, globally, both total funds raised and the number of listings increased by 196% and 134% in first half of 2021 compared with the same period last year. The US, Hong Kong and China’s A-share markets remained in the leading positions, raising a combined total of USD130.7 billion. Technology, media and telecoms (TMT); Healthcare / Lifesciences; and Consumer Markets were the top sectors, contributing over 70% of total funds raised in the US, HK and the A-share IPO markets.

Paul Lau, Partner, Head of Capital Markets, KPMG China, says: “High levels of market liquidity and solid investor sentiment are supporting the global IPO market, which stayed active in the first half of the year, with total funds raised nearly tripled compared with the same period last year. This was boosted by the increase in fundraising in the US, Hong Kong and European markets. We expect active global IPO activities to continue in the second half of 2021.”

In mainland China, the A-share IPO market remained active, supported by the economic recovery and further developments of the registration-based listing platforms. The STAR Market and ChiNext further showed their significance, recording 174 deals in the first half of the year and raising a total of RMB125.3 billion, driving the total number of listings to 248, more than double the total in the first half of 2020. Six of the top 10 A-share IPOs in terms of funds raised were from registration-based listings in the STAR Market and ChiNext.

Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, says: “Amid the revision of regulatory rules aiming to enhance overall market quality to better serve high-quality economic development, there are plenty of opportunities for qualified issuers as we are still in the middle of the boom time for China’s IPO market. In addition, the ‘Dual Circulation’ economic strategy places the domestic market as the mainstay for China's future growth, significant potential exists for domestic markets and local innovative growth enterprises to fuel China’s economy.”

In Hong Kong, homecoming listings continue to lift the city’s financial and capital markets and reflect the solid fundamentals and the city’s importance as an international capital-raising venue, with a growing ecosystem for innovative companies. During the first half of 2021, 6 sizeable listings of Chinese technology and logistics companies together raised a total of HKD139.6 billion, representing 65% of total funds raised in Hong Kong. In addition, 13 companies were listed under the reformed listing regime, raising a total of HKD141.1 billion, representing 66% of total proceeds of the period.

Additionally, it was recently announced that profit requirements will be lifted for the first time in nearly three decades, as the Exchange continues to focus on upholding market quality, protecting investor interests and maintaining the Hong Kong bourse’s competitiveness. The recent announcement may lead to an acceleration of IPO applications in the second half of this year, however the Hong Kong IPO market will not be significantly impacted in terms of funds raised.

Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG China, concludes: “As societies gradually emerge from the global pandemic and new social norms are here to stay, the demand for innovative and people-oriented technologies that improves the quality, reliability and accessibility of products and services will be a key driver for future growth. We expect that the momentum of IPO activities among the new economy sectors including healthcare, life sciences, logistics and supply chain and fintech will remain very strong in the coming quarters.”