Hong Kong’s IPO market is making a huge comeback.
Defying the intensifying protests that have hurt the city’s economy from trade to tourism, Hong Kong’s has led the world in initial public offerings since the start of September.
The total value of first-time share sales at the Hong Kong stock exchange since Sept. 1 is $7.9 billion, overshadowing Nasdaq Inc.’s $7 billion and $3 billion at the New York stock exchange, according to data compiled by Bloomberg. Anheuser-Busch InBev NV’s $5.8 billion IPO of its Asian unit and another billion-dollar-plus deal contributed to the lead held by the Asian financial center.
“The market has been volatile and challenging this year but we are now in a good window for IPOs in Hong Kong, ” said Alex Abagian, co-head of Asia Pacific equity capital markets at Morgan Stanley. “We are seeing a significant amount of quality capital being deployed towards good assets, primarily companies that are market leaders in their sector.”
While summers are typically quiet for first-time share sales in Hong Kong as bankers and investors go on holidays, the escalation of the pro-democracy protests and the trade war between China and the U.S. damped companies’ enthusiasm further this year. The total raised in IPOs plunged to $1.5 billion for the July-August period from $11.6 billion a year earlier, which was the busiest summer on record with listings of China Tower Corp. and Xiaomi Corp..
Sentiment in Hong Kong’s primary market turned around as AB InBev revived its IPO plan for Budweiser Brewing Company APAC Ltd. last month. The world’s second-largest offering this year attracted Singapore’s sovereign fund GIC Pte Ltd., which committed $1 billion. The sale was priced at the bottom of the marketed range and AB InBev partially exercised a right to increase the number of shares sold. Two weeks later, Chinese sportswear retailer Topsports International Holdings Ltd. priced its $1 billion initial share sale.
ESR Cayman Ltd., a logistics real-estate developer, is set to raise $1.6 billion as it’s expected to price its IPO at the middle of a marketed range, people familiar with the matter have said. That deal could be the second-largest transaction in the territory. China Feihe Ltd., a baby formula producer, started taking investor orders on Monday for its proposed IPO of up to $1.14 billion.
The rejuvenated momentum is also evident among the retail investors in the city. Some small-cap IPOs saw heavy over-subscriptions and frenzied trading in their debuts. Ascentage Pharma Group International attracted orders for 752 times its initial retail tranche this week, while shares of software developer 360 Ludashi Holdings Ltd. more than tripled on Oct. 10 on its first day of trading.
Elsewhere, WeWork called off one of the year’s most hotly anticipated IPOs in New York last month. In Australia, Latitude Financial Group Ltd. shelved what would have been the country’s biggest share sale this year, citing worries about how the company would trade on its debut. That was followed by PropertyGuru Ltd.’s IPO withdrawal.
For the year, Hong Kong’s bourse could still come in third or even fourth in first-time share sales, trailing the exchanges in New York and Shanghai. So far in 2019, the city’s IPO volumes have dropped 43% from a year earlier to $18.6 billion, data compiled by Bloomberg show. The buoyancy also didn’t work for everyone. Household appliance maker JS Global Lifestyle Co. shelved its Hong Kong IPO over the weekend, according to people familiar with the matter.
The city could still experience a late flurry, keeping bankers busy, Morgan Stanley’s Abagian said.
“On the back of the recent pick-up in activity, we remain reasonably optimistic for the rest of the year, with the coming five to six weeks expected to be busy in terms of IPOs and block trades,” he said.