Hong Kong exchange reports IPO drought in 2022 as profits slide

HONG KONG, China  -Hong Kong’s stock exchange last year saw the fewest new listings in more than a decade, it said Thursday as the city struggles to emerge from pandemic isolation and kickstart an economic recovery.

Hong Kong Exchanges and Clearing (HKEX) reported 90 initial public offerings in 2022, raking in HK$104.6 billion ($13.3 billion), a fall of almost 70 percent from the previous year.

Before the pandemic, Hong Kong’s bourse was often crowned as the top IPO venue in the world, drawing more than 100 new listings yearly between 2013 and 2020.

The latest figures mark a steep drop from peak levels in 2020 when IPOs raised HK$400 billion.

The recession-hit city’s exchange also saw annual profits plunge 20 percent to HK$10.1 billion, the first drop since 2016.

At the start of last year, vast swathes of Hong Kong’s economy shut down as the highly transmissible Omicron variant fueled the city’s worst-ever coronavirus outbreak.

The economic environment was further complicated by a regulatory crackdown in mainland China that waylaid initial public offerings from Chinese mega-companies.

Hong Kong markets rallied last month as investors rode a wave of optimism about China’s reopening and hopes for an easing of US interest rate hikes, though they have since fallen from a peak in late January.

Still HKEX saw a burst of activity in the final stretch of 2022, with the last month alone accounting for nearly a quarter of the IPOs.

Profits in the fourth quarter also rose 11 percent on-year to HK$2.98 billion, while quarterly revenue was up seven percent.

The second half of the year showed “encouraging momentum” in the IPO market and Hong Kong remains in the top four markets globally in 2022, the exchange operator said.

“Despite the challenging global economic and geopolitical backdrop, HKEX remained one of the world’s premier capital-raising venues,” said chief executive Nicolas Aguzin.

The Chinese finance hub has renewed its search for international listings, with city leader John Lee personally making overtures to Saudi Aramco.

HKEX’s share price has slipped around three percent since the start of the year while the city’s benchmark Hang Seng Index is up around three percent.

On Wednesday, Hong Kong finance chief Paul Chan said the stock exchange will study proposals to remain open during bad weather.