Hong Kong stock market's new shares holiday frenzy, the IPO market is worth looking forward to.
The A-share market was closed during the National Day holiday, while the Hong Kong stock market resumed normal trading from October 2nd, maintaining strong trading activity during this period.
In the four trading days from October 2nd to 7th, the Hang Seng Index recorded three positive sessions, with a cumulative gain of nearly 10%. This long-awaited market rally has also sparked optimism about the future of Hong Kong's IPO market, injecting vitality into new listings.
Multiple New Listings Join the Holiday Rally
Affected by the broader market, Hong Kong's new listings have generally underperformed this year, with many stocks hitting new lows after their debut, whether they were well-known AI stocks or consumer stocks.
Since late last month, benefiting from strong policy stimulus, Hong Kong's IPO market has staged a significant rebound, with the rally continuing to this day.
Wind data shows that during the National Day holiday (October 1st to 7th), multiple new listings in Hong Kong maintained strong upward momentum, with 11 stocks posting cumulative gains of over 20%. Among them, $EASOU TECH(02550.HK) saw the most explosive growth, nearly tripling in value; China's first AIGC stock $MOBVOI(02438.HK) has been on a tear since bottoming out in mid-September, with its latest share price erasing all losses since late June.
Stocks like $CIRRUS(02507.HK), $CHABAIDAO(02555.HK) , and RoboSense (02498.HK), which had been hitting new lows before the market recovery, also staged strong rebounds during the holiday, outperforming the broader market. ChaPanda, as a well-known consumer stock, has seen its share price skyrocket since mid-September, tripling in value thanks to domestic policy tailwinds and the National Day Golden Week.
Additionally, Hong Kong's recent "fundraising king" $MIDEA GROUP(00300.HK) , benefiting from the recovery in the consumer market, gained nearly 30% during the holiday. Since its listing on the Hong Kong Exchange in mid-September, Midea Group has become a favorite among investors, single-handedly helping the HKEX jump to fourth place in global fundraising rankings.
Due to the challenging environment, Hong Kong's IPO market has seen a high rate of post-listing declines in the second half of the year, with overall trading activity remaining sluggish. This has led many new listings to be seen as undervalued. After this rally, valuations for many new listings have improved but remain attractive. Recently, Goldman Sachs upgraded Chinese stocks to "overweight," expecting further gains of 15%-20%. If the market continues its upward trend, Hong Kong's new listings could see valuation normalization.
More New Listings Expected in the Future
Recently, the Hang Seng Index, the Nasdaq Golden Dragon China Index, and other indices have surged, significantly boosting investor confidence, improving valuations, and providing a favorable environment for Hong Kong's IPO market.
Hong Kong's Financial Secretary Paul Chan wrote in a blog post on October 6th that the improving market conditions and cautious optimism among investors are expected to accelerate the listing process for many companies in Hong Kong, including numerous tech startups, while also attracting more businesses to establish a presence in the city.
Chan also revealed that about 100 companies are currently in line to list on the HKEX, many of which are seeking to raise over $1 billion.
In recent years, the HKEX has deepened its listing reforms, including allowing new economy companies with weighted voting rights to list, relaxing secondary listing requirements, optimizing and simplifying the listing regime for overseas issuers, and lowering the Chapter 18C listing threshold, all aimed at attracting more companies to list in Hong Kong.
Chan noted, "Currently, over 330 new economy companies have listed in Hong Kong, elevating the city's stock market to a new level. While they account for only about 13% of listed companies, their combined market capitalization exceeds HK$9.6 trillion, representing over 26% of the total market cap and nearly 23% of daily turnover, propelling Hong Kong's stock market to new heights."
With more innovative and high-quality companies listing on the HKEX, the composition of Hong Kong's listed companies will become more diverse, attracting more investors focused on new economic growth areas and long-term opportunities.
It's worth noting that Hong Kong's relatively high stamp duty has drawn criticism from investors. In August 2021, Hong Kong raised the stamp duty from 0.1% to 0.13%, with the rate applied to both buyers and sellers, resulting in a combined rate of 0.26%.
The stamp duty hike has not improved market liquidity; instead, it has deterred some capital, negatively impacting the IPO market. Historical experience suggests that a stamp duty cut could provide a temporary boost to indices, enhance market liquidity, and raise trading volume.
Hong Kong's stamp duty may soon undergo significant reforms.
It is reported that Hong Kong's new Policy Address will be released on October 16th. Among the six recommendations in the Democratic Alliance for the Betterment and Progress of Hong Kong's proposal to enhance Hong Kong's IPO and fundraising center status is "reducing the stock stamp duty."
Industry insiders believe that if the stamp duty cut is implemented, it will boost market sentiment, further lift stock prices, and positively impact Hong Kong's IPO market.
Author: Yao Yuan
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