Still No 1 in IPOs, but fundraising through stocks and bonds at record lows in Hong Kong

Fundraising in Hong Kong hit the lowest level in a decade in the first quarter of this year as poor stock market performance hit companies’ plans to list or issue new shares, but the city still remains the largest initial public offering (IPO) market worldwide, according to Thomson Reuters data.

Brokers believe the worst is over, with a stock rebound likely in the second quarter.

“It was a really bad first quarter as the stock markets have been volatile from the beginning of the year while the yuan has devaluated against the US dollar. This has discouraged companies to list or make share placements, and investors have also lost appetite for dim sum bonds,” said Christopher Cheung Wah-fung, lawmaker of the financial services sector.

Falling yuan and worries over China’s slowdown pulled down the Hang Seng Index 10 per cent in January, followed by a drop of another 3 per cent in February, before bouncing back 6 per cent in the first three weeks of March. The benchmark index has thus wiped off all its gains last year.

Total funds raised in the city’s stock market in the first quarter stood at US$6.61 billion, down 45.9 per cent from the same quarter a year earlier, according to Thomson Reuters data. This is the worst performance since the first quarter of 2006, when just US$3.5 billion was raised in the city.