Hong Kong's IPO market is finally starting to turn around, consulting firm EY says

cnbc.com:

BEIJING — The market for initial public offerings in Hong Kong is set to improve significantly over the next five years, starting in the second half of this year, George Chan, global IPO leader at EY, told CNBC in an interview Wednesday.

«I think it will take a couple years to go back to the peak [in 2021] but the trend is there,» Chan said. «I can see the light at the end of the tunnel.»

High U.S. interest rates, regulatory scrutiny, slower economic growth and U.S.-China tensions have constrained Greater China IPOs in the last three years.

EY said in a report that while the volume of IPOs and proceeds in the U.S. increased significantly in the first half of 2024 compared to the same period a year ago, mainland China and Hong Kong saw a sharp decline in listings.

Many of the macro trends are now starting to turn around, which can support more IPOs in Hong Kong, said Chan, who is based in Shanghai.

«We are seeing a reversing trend,» he told CNBC. «We are seeing more of these [U.S. dollar] funds, they are moving back to Hong Kong. The main reason is that Hong Kong has already factored in these uncertainties.»

The Hang Seng Index is up more than 5% year-to-date after four straight years of decline — which was the worst such losing streak in the history of the index, according to Wind Information.

«Our HK cap markets team is very busy and has a strong pipeline for H2.  We expect to see many HKSE listings,» Marcia Ellis, global co-chair of private equity practice at Morrison Foerster in Hong Kong, said in an email Wednesday.

Many companies that were waiting for a listing in mainland China's A share market have decided to switch to one in Hong Kong, she said. «Previously [China Securities Regulatory Commission] approval was