From CNBC: 2024-07-03 20:07:36

The Hong Kong Stock Exchange commemorates its 24th anniversary, with an optimistic outlook for IPOs in the region. Despite challenging trends in recent years, experts predict a significant improvement in listings from mainland China and Hong Kong. With economic growth showing signs of recovery, a promising future awaits Hong Kong’s IPO market.

Several factors are contributing to the positive outlook, including a rebound in the Hang Seng Index and a shift of companies from mainland China to Hong Kong for listings. The global IPO market is expected to benefit from supportive measures in China to promote venture capital and boost IPO approvals in the region. A surge in retail sales in China offers hope for near-term IPO success, particularly for consumer companies.

Amidst economic uncertainties, the U.S. Federal Reserve and major central banks are reducing interest rates, making IPOs a more attractive investment. Hong Kong IPOs reported a 34% decline in the first half of the year, with similar trends observed in mainland China. However, improvements in post-IPO performance in Hong Kong signal a positive trajectory for the region’s IPO market in the next five years.

EY predicts a surge in deals in the second half of 2024, with expected medium-sized IPOs between 2 to 5 billion Hong Kong dollars. The geopolitical landscape and economic slowdown have impacted early-stage investments in Chinese startups, resulting in a significant drop in foreign venture funding. U.S. IPOs of China-based companies face scrutiny but experts foresee more large Chinese firms considering the U.S. market in the future, driven by investor interest and financial opportunities.

Read more: Hong Kong’s IPO market is set to improve over the next five years