HK's IPO market to keep top 5 ranking in 2025

International accounting firm KPMG foresees improved investor confidence in Hong Kong's IPO market and expects it to maintain its position among the global top five in 2025, as its financial funding sector shows robust resilience.

As of Dec 8, the Hong Kong stock exchange ranked 4th in the 2024 global IPO rankings, with total funds raised reaching HK$82.9 billion ($10.66 billion) from 63 completed IPOs, according to the latest report released by KPMG on Wednesday.

China Securities Regulatory Commission's measures to encourage leading Chinese mainland enterprises to list in Hong Kong and the Chinese mainland's plan to adopt a more relaxed monetary policy in the coming year will continue to bolster the city's lPO pipeline, as 90 percent of Hong Kong's IPOs are from the Chinese mainland, said Louis Lau, partner, head of Hong Kong capital markets group, KPMG China.

Lau said that Chinese mainland regulators such as the CSRC are positively engaged with the Hong Kong Special Administrative Region (SAR) government and are facilitating quality companies to list in Hong Kong.

"The regulators are trying to figure out a proper way to cut the time for applying listing overseas," Lau said. "We hold an optimistic attitude toward Hong Kong's IPO market. As Hong Kong is a bridge for Chinese mainland companies and foreign investors, if more mainland companies list in Hong Kong, the overseas investor will have more investment choices."

He also noted that the mainland's support of innovation, technology and biomedicine sectors will bolster the city's lPO volume and anticipated that large listings will even exceed HK$100 billion in the coming years.

The top two funds raised in Hong Kong's IPO market this year were from Chinese mainland home-appliance maker Midea Group and Chinese express company SF Holding, which were $4.6 billion and $749 million, respectively.

In addition to the mainland, the Hong Kong stock exchange is also exploring other markets. In the past two years, it has added three exchanges in the Middle East to its list of recognized stock exchanges, allowing secondary listings from the region.

Irene Chu, partner, head of new economy and life sciences, Hong Kong, KPMG China, said: "Currently, more than 100 listed companies in the Middle East meet the requirements to go public in Hong Kong, mainly from the financial and energy sectors.

"With the increasing connection between Hong Kong and the Middle East, they will foster stronger interest in Hong Kong, but it does not mean that they will seek a listing in Hong Kong in the near future," Chu added.

Data from KPMG show global IPO markets raised a total of $119.1 billion across 1,159 deals in 2024, marking declines of 9 percent in funds raised and 15 percent in deal volume compared to 2023. India is expected to lead global stock exchanges in terms of both funds raised and deal volume, with US stock exchanges following closely. Hong Kong and Shanghai will likely end the year in fourth and fifth place, respectively.

EY Greater China, another global advisory services provider, also pointed out in its report earlier this month that Hong Kong's IPO activities may regain momentum in 2025, with a chance to return to the forefront in global rankings.

The report said improving market conditions and a backlog of exit demand from private equity are supporting the 2025 equity capital markets, with IPOs likely to pick up across regions.