HK listings subdued as issuers adopt cautious approach, law firms say

Despite weak market sentiment and economic uncertainty in mainland China, Hong Kong’s capital market is showing caution in new share offerings, with potential issuers delaying their plans, according to law firm Clifford Chance. This has led to a longer window for deal-making as companies assess market conditions before fundraising.

In the first half of the year, IPO fundraising in Hong Kong fell by 35%, with deal volume and average deal size also decreasing. However, there is optimism as Hong Kong Exchanges and Clearing reported an increase in listing applications.

Companies like Xiaocaiyuan have resubmitted listing documents after lapses, indicating a trend in companies waiting for the right timing to list. The city’s capital market remains muted, but there is interest in sectors like hard technology and artificial intelligence.

Looking ahead, legal experts anticipate a gradual return of international capital to Hong Kong as the IPO market improves, with potential for significant deals in the second half of the year.