The U.S. may be seeing a slew of Chinese firms making their debuts on Wall Street, but Asia-Pacific has dominated initial public offerings (IPOs) during this quarter.
Asia-Pacific accounted for 65 percent of the 330 IPOs and 49 percent of the capital raised globally in the third quarter, according to an EY report on Thursday.
In comparison, stock exchanges in the U.S. accounted for 8 percent of global IPOs by volume and 9 percent by proceeds, the report said.
The largest IPO in Asia-Pacific by proceeds between July 1 and Sept. 15 was the $1.7 billion NetLink NBN Trust listing on the Singapore Exchange, which was also the second-largest debut globally in the period, EY said.
Despite the SGX’s crown for the largest regional IPO by proceeds this quarter, greater China markets saw the most activity, the report said.
Stock exchanges in greater China saw a total of 144 companies listed in the third quarter, making up 44 percent of global IPOs, according to EY. Hong Kong saw 37 IPOs, compared with 56 on the Shanghai Stock Exchange and 51 on the Shenzhen Stock Exchange’s main and ChiNext boards, the report said.
While Hong Kong might have seen fewer new listings than the mainland exchanges, the proceeds from two companies listed on its main board — ZhongAn Online Property & Casualty Insurance and Zhongyuan Bank — each topped the $1 billion mark.
Greater China IPOs to remain robust
Online-only insurer ZhongAn Online was also the second-largest listing in the region, and the third largest globally, in the third quarter. The company saw its shares surge as much as 18 percent on its Thursday debut in Hong Kong after its $1.5 billion IPO.
“I think Hong Kong is a big market, a special market, in the sense that it’s facing the international investors. At the same time, we have our business in China, [so Hong Kong] is very close to where we’re operating,” Francis Tang, CFO of ZhongAn Online, told CNBC’s “Squawk Box” on Thursday.
The performance of ZhongAn Online’s listing could potentially influence sentiment for IPO markets in the region ahead, one expert said.
“[T]he IPO market right now is really hot, with some large deals that will give the catalyst for some other good companies to come over to Hong Kong,” Ringo Choi, Asia-Pacific IPO leader at EY, told CNBC’s “Capital Connection” on Thursday.
In Hong Kong specifically, one factor fueling IPO markets has been the flow of capital from the mainland, Choi said. “In general, a lot of money is from China. This is a continuous chunk of money that is moving from China to Hong Kong or other places, especially as they have outbound initiatives,” he explained.
Indeed, Hong Kong may even be attracting U.S. companies. The Wall Street Journal reported on Wednesday, citing a person familiar with the matter, that Burbank, Calif.-based STX Entertainment, a three-year-old Hollywood studio, was aiming to raise around $500 million in a Hong Kong listing in the first quarter of next year.
Hedge funds from the U.S. and other countries were also bringing money to Hong Kong to buy assets they believed were undervalued, Choi added.
Heading into the last quarter of the year, IPO activity looks set to remain robust in greater China markets.
“I think the fourth quarter is surely one of the strongest … for most of the Chinese companies. They will rush to complete their IPOs,” Choi said. Listings in the education, consumer products and fintech sectors were likely in Hong Kong in the fourth quarter, he added.
On the whole, IPO markets this year have shown marked improvement. Global IPO volumes year to date have already surpassed last year’s figure, according to EY.
Last year was a relatively sluggish one for IPOs in the U.S. after fewer large companies went public than expected. That slowdown in 2016 had been attributed various factors, including uncertainty surrounding the U.S. election and Brexit.