Opinion | Quality should come before quantity for Hong Kong’s IPOs

Hong Kong has long stood as a beacon of financial prowess, with its stock exchange often leading the world in initial public offerings (IPOs). In 2009, Hong Kong ranked as the world’s largest IPO market for the first time. A decade later, in 2019, it retained this position, buoyed by Alibaba’s significant secondary listing – a testament to the city’s financial vibrancy and its role as a gateway to global capital.

Yet, as with all golden ages, Hong Kong’s lustre is dimming. The once robust IPO market now echoes with the whispers of decline. IPO proceeds have plummeted, and the parade of high-profile listings has slowed to a trickle, mirroring Hong Kong’s broader struggle to retain its status as a global financial hub.

This year has offered little relief. Despite 41 companies going public and raising more than HK$19 billion (US$2.4 billion), the underlying trends are troubling. More than half of these newly listed companies opened lower than their listing price on their debut, with 49 per cent experiencing declines in stock price and 44 per cent accumulating losses of more than 10 per cent. For example, Chinese bubble tea maker Sichuan Baicha Baidao Industrial, despite being the biggest debut of 2024, saw its stock plunge by 27 per cent on its first day and has gone further down since listing.

Similarly, Black Sesame International Holding, a company specialising in autonomous driving technologies, further underscores the pitfalls of Hong Kong’s current IPO landscape. Despite raising significant capital, its stock swiftly plummeted by over 30 per cent, revealing a weak financial foundation marked by growing substantial net losses totalling nearly 10 billion yuan (US$1.4 billion) in the last three years.