Hong Kong’s market for initial public offerings (IPOs) has come roaring back. Attractive valuations, strong liquidity and supportive government policies, what’s not to like? Concerns about geopolitical tensions and a trade war have taken a back seat, at least for now. Certainly, a 90-day truce in the tit-for-tat tariffs battle between China and the United States has helped sooth nerves and comes at the right time. Contemporary Amperex Technology (CATL), the largest maker of electric-vehicle batteries, is expected to raise as much as HK$41 billion following its launch on Monday, likely making it Hong Kong’s largest IPO since Kuaishou Technology raised US$6.2 billion in January 2021.
This will be a busy month, as Shanghai-listed Jiangsu Hengrui Pharmaceuticals aims to raise as much as HK$9.89 billion while Mirxes Holding from Singapore is seeking HK$1.09 billion under a rule that allows pre-profit start-up biotechnology firms to list. Another IPO aspirant is IFBH Limited, a Thai company incorporated in Singapore that is also the world’s second-largest bottler of coconut water.
After a couple of disappointing years, the city’s capital markets began staging a rebound late last year. The benchmark Hang Seng Index has risen to a two-month high with positive earnings from such bellwether firms as Alibaba, the e-commerce giant that is also the parent company of this newspaper.
As China’s EV battery champion, the IPO by CATL outside the mainland is bound to attract interests from international investors. A global leader in batteries, it has been expanding overseas. Its US$7.8 billion plant in the eastern city of Debrecen in Hungary is expected to start production later this year; likewise an EV production facility by BYD, the world’s biggest maker of electric vehicles.
Hong Kong’s IPO market this year is expected to see significant growth, with estimates suggesting it could rank among the top three global IPO venues, raising about HK$130 billion from between 70 and 80 offerings. Relatively low interest rates, strong regulatory support, and positive market sentiments have all contributed.
For once, don’t sell in May and don’t go away.
