Shanghai Surpasses Hong Kong as World's Number One IPO Destination

Hong Kong hopes to take up the mantle after falling to sixth place.

Anthony Russo
    Mar 31, 2020 7:20 AM  PT
Shanghai Surpasses Hong Kong as World's Number One IPO Destination
author: Anthony Russo   

Hong Kong is no longer the world's leading destination for IPOs, as the Shanghai Stock Exchange has overtaken it in the first quarter.

In the three months through March, companies have raised $7.27 billion in Shanghai, thanks to technology startups listing in the city, as the South China Morning Post reported today. Leading the way in the city was Beijing-Shanghai High-Speed Railway Co., Ltd., (SS: 601816) raising $4.5 billion in its IPO in January. 

For the past two years, Hong Kong has been the world's largest market for IPOs. It held the top spots in 2015 and 2016 as well but fell to sixth place in the first quarter. The good news for Hong Kong is that many giants have expressed interest in seeking IPOs on the exchange this year, encouraged by a loosening of its listing rules.  

That includes fast-food chain operator Yum China Holdings Inc., (NYSE: YUMC), search engine Baidu Inc.(Nasdaq: BIDU), and online retailer Inc.(Nasdaq: JD) In the coming weeks, the health supplements and skincare products provider, Tycoon Group Holdings will look to list its shares in Hong Kong in the coming weeks, as the company announced its pricing on Monday.

However, Edward Au, the co-leader of Deloitte China's national public offering group, told the SCMP that some industries including food and beverage, hospitality, travel, and leisure, could be forced to postpone its listings over coronavirus concerns. 

"If issuers want to get their deals listed in Hong Kong within this year, the latest they have to file [by] would be by July or mid- August," Au said.

He added, "If by then [and] the virus has not come under control, it will be challenging to launch sizeable deals."

On Tuesday, the Hang Send Index (HSI) rose nearly 2% to 23,603.48 points. As the HSI looks to rebound in a volatile market, the benchmark is up almost 2,000 points from the beginning of last week.

It's been a crazy year for Hong Kong and the rest of the world with the outbreak of the pandemic, but the top destination for IPOs in the past two years will look to take up the mantle by the end of the year as big companies are making efforts to list in the city.