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Dec 11, 2018

Hong Kong set to win global IPO crown

Listings in the region raise $31.4 bn in 2018

Hong Kong is set to take the global IPO crown this year for the most money raised in stock market flotations, narrowly beating competitor bourse the NYSE, according to London-based financial analytics firm Dealogic.

Companies listing in Hong Kong have sold shares worth $31.4 bn so far this year, the highest total in eight years, compared with $30.2 bn on the NYSE.

Paradoxically, however, Hong Kong’s new listings have posted the worst performance among leading bourses, with just six of the biggest 20 IPOs trading above their offer price a month after debut, compared with 16 on the NYSE and 10 on Nasdaq.

Two of Hong Kong’s biggest deals, electronics company Xiaomi and food delivery app Meituan Dianping, which raised $9.7 bn between them, are down 19 percent and 26 percent, respectively, since their floats in July and September.

These figures come as a setback to Hong Kong and could spark fears that such poor performance numbers could weigh on IPO volumes in 2019. Several companies have recently cut the size of their offerings, while others have held back from floating in the hope of a better environment later.

One big factor driving the positive rise in Hong Kong’s flotation numbers overall in 2018 has been the hosting of a series of Chinese tech floats after a change in its listing rules in April to allow dual-class shares.

But Hong Kong has been hit by volatility stemming from concerns over a US-China trade war and by slowing growth in China, the world’s second-largest economy. Hong Kong’s benchmark Hang Seng Index has fallen 13 percent this year, while the Shanghai Composite Index has dropped more than 20 percent. In the US, the S&P 500 is up 0.8 percent.