July 7, 2022

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IPOs in China, Hong Kong down amid omicron surge, stock volatility

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The number of public listings in greater China fell significantly in the first quarter of the year, but still performed better than other global markets, data from consultancy EY showed.

Greater China overall had a 28% drop in the number of initial public offerings, although IPO activity in Hong Kong was slower compared to mainland China.

“Hong Kong saw notably slower IPO activity due to recent market volatility, a severe outbreak of Omicron cases and a relatively bigger fall in the local stock market indices,” said EY in a report.

Hong Kong had just 12 IPO deals, a drop of over 60% compared to a year ago.

Chinese tech shares have plummeted over the past year, hit by China’s regulatory crackdown and ongoing tensions with the U.S. The Hang Seng Tech index is down around 44% compared to a year ago, while the benchmark Hang Seng index has fallen about 22% in the same period.

“While Mainland China also saw a small decline in deal numbers, proceeds rose [year-on-year] due to hosting three of the seven mega IPOs in Q1 2022,” the firm said.

While the number of IPOs fell, proceeds from the overall greater China listings rose slightly — by 2% compared to a year ago, or $30.1 billion.

The tumble in listing activity in China and Hong Kong followed a similar trend in the rest of Asia-Pacific, where IPOs also fell — but not as steeply, at 16% year-on-year. IPO proceeds in Asia-Pacific rose by 18%.

‘Sudden reversal’ from record highs last year

The decline in Asia-Pacific was less severe compared to IPOs globally – with a fall of 37% in the first quarter compared to a year ago, or 321 listings. Global IPOs raised $54.4 billion in proceeds from January to March this year, a drop of 51% in the same period.

Read more about China from CNBC Pro

The overall tumble worldwide was a turnaround from record highs in 2021 at 2,436 IPOs, according to EY.

“The sudden reversal can be attributed to a range of issues,” EY said. They include rising geopolitical tensions, stock market volatility, as…

2022-04-05 02:20:00

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