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Exclusive | JPMorgan says IPO markets in Hong Kong, mainland China set for turnaround as stock rallies reflate valuations and confidence

  • Stock benchmarks in Hong Kong and Shanghai have risen 26 per cent and 15 per cent respectively from their lowest levels this year
  • IPO pipelines signal better market outlook as companies become more comfortable with valuations, US bank says

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JPMorgan head office building in Central, Hong Kong. Photo: Sun Yeung
Daniel Renin ShanghaiandZhang Shidongin Shanghai
A bull run in Hong Kong’s stock market has helped raise valuations and improve sentiment among investors, feeding a recovery in fundraising activities on the local bourse and its peers in mainland China, according to JPMorgan.
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As such, new listing candidates are becoming more reasonable about their expectations for initial public offering (IPO) pricing, according to Sjoerd Leenart, the US bank’s head of Asia-Pacific region. Capital-hungry technology start-ups are also likely to be a key growth driver in the primary market, he added.

“They are more realistic than they were before,” he said in an interview in Shanghai on Thursday, adding that most prospective listings in the pipeline were still not massive deals. “For some, the valuation now is good enough and they go to the market. For others, they will hope for more.”

He made the observations as the biggest US bank hosted more than 2,500 delegates and 1,300 companies at its Global China Summit in Shanghai against the backdrop of recent stock gains. The Hang Seng Index has risen 26 per cent from this year’s low on January 22, while the Shanghai Composite Index rallied 15.3 per cent from its February 5 low.

The Hang Seng Index has risen 26 per cent since hitting the year’s low on January 22. Photo: Jelly Tse
The Hang Seng Index has risen 26 per cent since hitting the year’s low on January 22. Photo: Jelly Tse

JPMorgan’s chairman Jamie Dimon and Microsoft co-founder Bill Gates are among the speakers at the two-day summit. Joe Tsai, co-founder and chairman of Alibaba Group Holding, owner of the South China Morning Post, shared his views on Thursday.

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