Hong Kong’s IPO market is frozen

Source: Morning Wrap

Seems that there are fewer HK IPO stories than before in Morning Wrap? Arr… that’s not our fault - because Hong Kong’s IPO market is almost at its slowest pace since the 2008 financial crisis, per Bloomberg data.

Ugh? HK IPO is no longer hot?

Believe it or not, there were only 7 companies that went public in Hong Kong this second quarter... and instead of popping up, their first-day performance just sucks. In May, the average first day gain of new IPOs is -6.2%.

  • For our easier comparison: total IPO of 2Q19 - 22; average debut gain of May 2020 - +56.1%. What a... slowdown. 📉

Is it the same elsewhere? Not really… The total fund raising volume on Nasdaq this year has already exceeded the whole of 2020, riding on the SPAC boom. Though its first-day pop also drifted lower by half.

  • vs HK: fund raised year-to-date is only half of 2020; but the year-to-date volume over the same period is still higher.

That’s slow. What’s the reason? 👀

The sentiment isn’t good. Following the landmark fine on Alibaba and a series of antitrust inspections on other local tech firms, many Chinese firms are reluctant to go public now in fear of being the next target.

Inflation fears could be counted as the second factor. It’s not as easy as before for stocks to get a higher valuation than before.

+ But maybe it’s recovering? The city’s latest go-public Angelalign has been oversubscribed 800 times (ongoing now). Look forward to its final debut.

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