Accountancy firms expect large listings, local spin-offs and rising stocks to boost Hong Kong market

Initial public offerings will jump in 2014 in Hong Kong, the world’s second-largest IPO market, according to predictions from three of the ‘Big Four’ accountancy firms.

KPMG, EY and Deloitte Touche Tohmatsu all predict proceeds from Hong Kong IPOs will rise by more than 20 percent to the equivalent of more than $26 bn in 2014 due to several large offerings, relaxation of IPO rules for mainland Chinese companies and rising stock markets.

Hong Kong raised a total of $21.2 bn in 40 listings in 2013, placing it a distant second behind the US, which raised $49.5 bn in 135 offerings, according to international IPO research firm Renaissance Capital. The UK came in third, with $11.5 bn in proceeds from 19 IPOs.

After an increase of 78 percent in the Hong Kong IPO market in 2013, ‘we expect the momentum to continue in 2014,’ Rebecca Chan of the capital markets group of KPMG China, says in a press release.  ‘The key driver for next year is expected to be a larger number of sizable deals, including large IPOs from spin-offs of locally listed companies, that would each raise more than HK$30 bn ($4 bn) in proceeds.’

KPMG predicts 100 companies will list in Hong Kong in 2014 after some 90 listings in 2013 and 60 in 2012. A key driver will be the relaxation in IPO rules by the China Securities Regulatory Commission, which has eased criteria and simplified the IPO approval process for Chinese companies.

Deloitte’s Edward Au, co-head of the national public offering group, predicted in a press conference earlier this month that the Hong Kong stock market will rise in 2014, helping build momentum for IPOs and encouraging between 85 and 100 new listings in the year.

Terence Ho, EY’s Greater China strategic growth markets leader, predicted record IPO activity globally, regionally and in Hong Kong in 2014.

‘We expect to see… a number of significant spin-offs of local Hong Kong companies to improve shareholders’ value,’ Ho says in a press release. ‘Sectors which will lead the way include the financial, technology, real estate and healthcare sectors.’