Hong Kong's IPO market gets shot in the arm from China listings

Tighter regulations over mainland IPOs and moves to encourage HK listings behind shift

- Joyce ZK Lim

SHENZHEN With two strikes of the gong this week, the Hong Kong Stock Exchange welcomed some of its largest new listings in 2024 - an autonomous driving company and a bottled-water giant, both from mainland China.

Their initial public offerings (IPOs), which raised over HK$10 billion (S$1.7 billion), came on the heels of the city's largest fundraising deal in three years by Chinese home appliance maker Midea in September.

Taken together, these were a shot in the arm for the Hong Kong bourse, which had seen IPO fundraising slow to a two-decade low in the first half of 2024.

They also cast a spotlight on the city's role as a hub for Chinese companies to raise capital, especially as listings on the mainland slow amid tighter scrutiny from regulators.

On Oct 24, Beijing-based Horizon Robotics, which provides technology for autonomous driving systems, began trading on the Hong Kong Stock Exchange after raising HK$5.4 billion.

This followed a HK$5 billion listing by China Resources Beverage, the Shenzhen-based maker of packaged drinks including C'estbon water and Fire coffee, on Oct 23.

These recent public offerings by mainland Chinese companies, including Midea's US$4.6 billion (S$6.1 billion) secondary listing, have lent optimism to Hong Kong's hitherto sluggish IPO market, where funds raised had fallen every year from 2021 to 2023.

With these listings, proceeds from Hong Kong's IPOs in 2024 to date at US$8.7 billion as at Oct 23 - have exceeded funds raised for the whole of 2023, according to data compiled by Bloomberg.