HKEX CEO Anticipates IPO Revival with 100 Applicants Ready

Key Takeaway

• HKEX CEO Bonnie Chan anticipates a revival in IPO activity, with 100 applicants ready to list amid improving conditions and Chinese regulatory support.
• Hong Kong strengthens financial ties with Saudi Arabia, aiming to diversify investor bases and encourage new listings through strategic partnerships.
• Despite economic and geopolitical challenges, the collaboration between Hong Kong and Saudi Arabia presents mutual growth opportunities, highlighted by efforts like the CSOP Saudi Arabia ETF.

Anticipating IPO Revival

Hong Kong Exchanges & Clearing Ltd. (HKEX) is optimistic about the resurgence of significant initial public offerings (IPOs) in the city, buoyed by improving conditions and support from Chinese regulators. CEO Bonnie Chan, in a recent interview, highlighted the presence of 100 applicants poised to list, signaling a potential turnaround from a period of decline. The exchange has experienced a notable slump in IPO activity, with proceeds in 2023 hitting a two-decade low. However, recent weeks have shown promising signs of recovery, partly due to China's commitment to encourage more firms to list in Hong Kong and to enhance the trading links between Shanghai, Shenzhen, and Hong Kong. This positive momentum is underscored by a 23% surge in the benchmark Hong Kong stock index since January, revitalizing trading volumes and setting a supportive stage for upcoming IPOs.

Strengthening Saudi-Hong Kong Ties

In a strategic move to diversify its investor base and boost the stock market, Hong Kong is deepening its financial connections with Saudi Arabia. This collaboration is marked by the organization of a conference aimed at attracting Saudi investments and facilitating new listings. The initiative reflects a broader effort to counterbalance the challenges posed by geopolitical tensions and a sluggish Chinese economy, which have dampened investor interest in recent years. The partnership also aligns with Saudi Arabia's Vision 2030 goals, which include increasing foreign ownership in its market. The launch of the CSOP Saudi Arabia ETF in Hong Kong, despite attracting modest funds since its inception, represents a significant step towards bridging the investment gap between the two regions.

Navigating Economic and Geopolitical Challenges

Both Hong Kong and Saudi Arabia are navigating their unique sets of economic and geopolitical challenges. Hong Kong's financial market has been impacted by a slow Chinese economy and rising geopolitical tensions, leading to a decline in IPO funds and investor interest. Conversely, Saudi Arabia's market has shown resilience and growth, driven by efforts to increase foreign ownership and liquidity under the Vision 2030 agenda. The partnership between Hong Kong and Saudi Arabia, therefore, offers a mutual opportunity for economic growth and increased market exposure. Efforts to cross-list the CSOP Saudi Arabia ETF in Shanghai could further facilitate investment flows and underscore the strategic importance of connecting with capital hubs in the Middle East.

Management Quotes

• Bonnie Chan, CEO of Hong Kong Exchanges & Clearing Ltd.:

  "What we’ve seen lately, in the last two weeks of April, it’s giving us a lot of hope."