Famous Mainland Firm Rush to List in Hong Kong (AI Translation)

【周刊提前读】内地知名企业纷纷赴港上市 港股IPO乍暖后劲如何？

[para. 1] As 2024 nears its end, the Chinese beauty brand Mao Geping made its debut on the Hong Kong Stock Exchange on December 10, witnessing an impressive 77% surge in stock price on its initial trading day. This success was in line with a broader revival of Hong Kong's IPO market in 2024, marked by increased investor interest and a series of significant public offerings, such as Midea Group's record-breaking listing in September.

[para. 2] The number of IPOs in Hong Kong surged from 2023's lows despite market challenges, with a total of 63 IPOs expected in 2024 raising approximately HKD 83 billion—a significant increase from the HKD 46.3 billion raised in 2023. Companies like Midea Group, China Resources Beverage, and Horizon Robotics, among others, facilitated this surge with their substantial offerings of over HKD 5 billion each.

[para. 3] The introduction of Chapter 18C of the Listing Rules for pre-profit specialty technology companies also added new momentum, with five companies applying for listings under this clause. The special purpose acquisition company mechanism experienced its first merger transaction in October 2024, further supporting market dynamism.

[para. 4] Several policy changes have contributed to this positive shift, including the U.S. Federal Reserve's resumption of its rate-cut cycle and China's stimulus measures, which boosted investor confidence. Additionally, initiatives like the China Securities Regulatory Commission's "Five Measures for Hong Kong," introduced in April 2024 to promote mainland companies listing in Hong Kong, have also fostered market growth.

[para. 5] The market outlook, while optimistic, remains cautious. The potential impact of Donald Trump's anticipated presidency and its policies on U.S.-China relations might introduce volatility. Nonetheless, the Hong Kong Stock Exchange is showing signs of a turnaround, although the sustainability of this recovery is uncertain.

[para. 6] The listing of Midea Group set a benchmark, representing a shift towards encouraging leading mainland enterprises to list in Hong Kong, as seen in its successful HKD 35.7 billion IPO. This trend has resonated with companies like SF Holding and has incited other major firms such as Joyson Electronics and Hengrui Medicine to consider Hong Kong listings.

[para. 7] Shifts in industry composition are also notable, with a renewed focus on traditional industries, mining companies, and companies from new economy sectors planning to list, driven by sustainable profitability and solid regulatory backgrounds.

[para. 8] The trend of transitioning firms from China's stock exchanges, such as Wu Yi Vision, corroborates a pivot towards Hong Kong, capitalizing on regulatory changes and the slowdown in A-share IPO activities.

[para. 9] The approval process for overseas listings remains a point of contention, with CSRC's filing requirements presenting challenges for companies aiming for rapid market entry. Nonetheless, efforts to streamline processes and support Hong Kong listings are ongoing, with predictions of increased ease in 2025.

[para. 10] The legal sector has felt the impact of Hong Kong's market fluctuations, with international law firms downsizing amidst low profit margins from IPOs, signifying broader market recovery challenges.

[para. 11] Looking ahead, experts anticipate further recovery for Hong Kong's stock market IPOs in 2025, with projected total fundraising potentially reaching between HKD 100 billion and HKD 120 billion. The IPO landscape is expected to benefit from ongoing policy support and infrastructural improvements, including broadened access to Middle Eastern and Asian markets.

[para. 12] Structural changes and policy improvements are projected to facilitate this growth, expanded by initiatives such as the inclusion of the Middle Eastern stock exchanges in HKEX's recognized exchanges. However, valuation challenges remain a hurdle for attracting overseas companies. HKEX's global expansion efforts, particularly its forthcoming Middle Eastern office, reflect its commitment to diversifying and expanding its listing sources.