Hong Kong exchange: the race is still on

As the first half of 2019 rapidly approaches, the Hong Kong Stock Exchange appears to have lost a lot of ground to its rival bourses in the US. But the market is more resilient than one might think.

  • By Gina Lee
  • 13 Jun 2019
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The Hong Kong Stock Exchange has had a tricky start to the year, losing its ranking as the top IPO market by value to New York. The New York Stock Exchange and the Nasdaq are 2019’s top and runner up IPO markets by value to date, respectively.

Issuers have raised $17.68bn from 21 deals on the NYSE so far this year, according to Dealogic. The Nasdaq has had $14.88bn of issuance from 68 deals, with the HKEX lagging at $6.7bn from 53 deals.

Nor has the recent news cycle helped. Hong Kong protesters have dominated the local news this week, rallying against an extradition treaty that could lead to political activists being sent to China. Clearly less grave, but no less important in the limited context of the stock market, is the news that ESR Cayman pulled its $1bn listing this week.

But neither the numbers, nor the short-term news, present the full picture. The US markets received a big fillip from two mega deals this year. Ride sharing platform Uber Technologies bagged a whopping $8.1bn from its IPO on the NYSE in early May, while fellow transportation network company Lyft listed on the Nasdaq for $2.5bn in March.

By capturing these two high profile issuers, the US bourses have certainly benefitted. But the wins have brought their share of troubles too. Uber, for instance, tumbled by around 10% immediately after its debut, before bouncing back. At the time of writing, its shares were just about 2% above the IPO price. Lyft, meanwhile, is around 25% below its listing price already. By comparison, the Nasdaq Composite Index has gained 17% year-to-date, and the NYSE Composite Index is higher by 12%.

The US’s gains are not necessarily Hong Kong’s loss, especially given the city has a few mega deals on the horizon. Belgian brewer AB InBev is gunning for up to $5bn from a float of its Asian business, with HKEX approval expected on June 13. Technology company Alibaba Group Holding has also reportedly filed a homecoming listing of up to $20bn in the city.

More importantly, market volatility caused by the continuing US-China trade war has not deterred investors. Hansoh Pharmaceutical, for instance, had an impressive group of nine cornerstone investors for its IPO, which it priced at the top of guidance, and its books were multiple times subscribed with institutional investors showing no price sensitivity. Xinyi Energy Holdings, which listed in May, secured two cornerstones for its $465m offering. Menswear clothing company Mulsanne Group Holding, meanwhile, got Wanda Investment and Sasseur as cornerstone investors for its IPO in the same month.

In addition, the benchmark Hang Seng Index has risen by around 8% year-to-date.

Hong Kong can also take comfort from its past experiences. Last year, for example, the bourse was also lagging behind its US peers in the first half, before ending 2018 at the top, followed by the NYSE and the Nasdaq in second and third ranks based on amounts raised.

If all goes well for the HKEX, 2019 could be a similar story.

  • By Gina Lee
  • 13 Jun 2019

Panda Bonds Top Arrangers

Rank Arranger Share % by Volume
1 Bank of China (BOC) 23.98
2 China Merchants Securities Co 16.10
3 Industrial and Commercial Bank of China (ICBC) 13.41
4 Agricultural Bank of China (ABC) 9.76
5 China Securities 8.13

Bookrunners of Asia-Pac (ex-Japan) ECM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 CITIC Securities 8,322.47 36 8.67%
2 Goldman Sachs 7,626.77 29 7.95%
3 China International Capital Corp Ltd 5,848.43 34 6.09%
4 Morgan Stanley 5,453.25 37 5.68%
5 UBS 5,301.00 38 5.52%

Bookrunners of Asia Pacific (ex-Japan) G3 DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 16,535.56 146 8.20%
2 Citi 11,568.29 94 5.73%
3 JPMorgan 11,150.73 75 5.53%
4 Standard Chartered Bank 7,774.81 79 3.85%
5 Bank of America Merrill Lynch 7,143.11 58 3.54%

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