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IPOs in China, Hong Kong down amid omicron surge, stock volatility


The variety of public listings in better China fell considerably within the first quarter of the yr, however nonetheless carried out higher than different world markets, knowledge from consultancy EY confirmed.

Larger China total had a 28% drop within the variety of preliminary public choices, though IPO exercise in Hong Kong was slower in comparison with mainland China.

“Hong Kong noticed notably slower IPO exercise because of latest market volatility, a extreme outbreak of Omicron circumstances and a comparatively larger fall within the native inventory market indices,” stated EY in a report.

Hong Kong had simply 12 IPO offers, a drop of over 60% in comparison with a yr in the past.

Chinese language tech shares have plummeted over the previous yr, hit by China’s regulatory crackdown and ongoing tensions with the U.S. The Cling Seng Tech index is down round 44% in comparison with a yr in the past, whereas the benchmark Hang Seng index has fallen about 22% in the identical interval.

“Whereas Mainland China additionally noticed a small decline in deal numbers, proceeds rose [year-on-year] because of internet hosting three of the seven mega IPOs in Q1 2022,” the agency stated.

Whereas the variety of IPOs fell, proceeds from the general better China listings rose barely — by 2% in comparison with a yr in the past, or $30.1 billion.

The tumble in itemizing exercise in China and Hong Kong adopted an identical development in the remainder of Asia-Pacific, the place IPOs additionally fell — however not as steeply, at 16% year-on-year. IPO proceeds in Asia-Pacific rose by 18%.

‘Sudden reversal’ from report highs final yr

The decline in Asia-Pacific was much less extreme in comparison with IPOs globally – with a fall of 37% within the first quarter in comparison with a yr in the past, or 321 listings. World IPOs raised $54.4 billion in proceeds from January to March this yr, a drop of 51% in the identical interval.

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The general tumble worldwide was a turnaround from report highs in 2021 at 2,436 IPOs, in keeping with EY.

“The sudden reversal will be attributed to a spread of points,” EY stated. They embrace rising geopolitical tensions, inventory market volatility, in addition to worth correction in over-valued shares from latest IPOs.

EY additionally attributed the drop to rising issues about rising commodity and power costs, the influence of inflation and potential rate of interest hikes; in addition to the “COVID-19 pandemic danger persevering with to carry again a full world financial restoration.”

In keeping with the sharp decline in world IPO exercise, there was additionally a “appreciable” fall in SPAC IPOs — the general public itemizing for particular goal acquisition corporations.

Mega listings, which EY outlined as having proceeds of greater than $1 billion, additionally fell. It stated there have been additionally quite a lot of IPO launches postponed because of “market uncertainty and instability.”