Hong Kong regains global IPO crown from New York in 2018 thanks to its listing reforms

The city saw 125 companies raise US$36.5 billion, the highest since 2010, according to Refinitiv data

TMT sector accounted for 39 per cent of all funds raised on the back of listing reforms

The Hong Kong stock exchange reclaimed its crown as the No 1 IPO market in the world in 2018, beating last year’s winner New York, as listing reforms led to the highest fundraising in eight years, according to Refinitiv data.

Hong Kong’s main board had a 17.6 per cent share of the global IPO market this year as of December 21, with 125 companies raising US$36.5 billion. This was the highest since 2010 and up 175.5 per cent from last year, according to the data provider formerly known as Thomson Reuters.

The New York Stock Exchange on the other hand saw 64 IPOs raising US$28.9 billion, accounting for 13.9 per cent of the global IPO market.

While Hong Kong was the No 1 IPO market in 2015 and 2016, the city mainly attracted traditional manufacturing firms and financial companies, with few tech companies listing here as they preferred New York and the Nasdaq.

The largest reforms in 25 years allowing dual-class shareholding companies and pre-revenue biotech firms to list proved to be a major driving force in boosting tech IPOs this year.

Dual-class or weighted voting rights shareholding companies allow founders and key management greater say than other shareholders. These are favoured by many technology companies such as Facebook, Google, JD.com and others.

The reforms launched by the bourse operator Hong Kong Exchanges and Clearing in April attracted two dual-class shareholding companies: the world’s fourth largest smartphone maker Xiaomi, which raised US$5.4 billion in its July listing, and food delivery firm Meituan Dianping with its US$4.9 billion IPO in September.

Mobile tower operator China Tower’s US$7.5 billion IPO – the largest IPO in Hong Kong this year – was also tech related.

Overall TMT IPOs raised US$15.7 billion, up 605.5 per cent from 2017 while the number grew 94.4 per cent year on year.

Tokyo’s rise to third place in the IPO league table this year was also due to its ability to draw tech plays with US$24.5 billion in proceeds. This was mainly due to Softbank mobile unit’s US$23.3 billion jumbo IPO this month – Japan’s largest ever IPO and the world’s second largest after Alibaba Group Holding’s US$25 billion fundraising in New York in 2014.

The Japanese conglomerate owns stakes in e-commerce giant Alibaba and ride-sharing companies Uber and Didi Chuxing, among others.

Alibaba is the parent company of the South China Morning Post.

Source: South China Morning Post