China and Hong Kong IPO deal slumps as Omicron case jumps

The number of public listings in Greater China dropped significantly in the first quarter of the year, but still performed better than in other global markets, data from consultant EY showed.

Greater China as a whole saw a 28% drop in initial public offerings, although IPO activity in Hong Kong was slower than in mainland China.

“Hong Kong has seen significantly slower IPO activity due to recent market volatility, a severe outbreak of Omicron cases and a relatively large fall in the local stock market index,” EY said in a report.

There were only 12 IPO deals in Hong Kong, down more than 60% from a year earlier.

Shares of Chinese technology have plummeted over the past year due to a crackdown on Chinese regulators and ongoing tensions with the United States, with the Hang Seng Tech index down about 44% from a year ago, while the benchmark Hang Seng index is down about 22%. Same period

“Although mainland China has also seen a small drop in the number of contracts, revenues have risen [year-on-year] Due to hosting seven mega IPOs in the first quarter of 2022, ”the firm said.

With the number of IPOs declining, revenue from the overall Greater China listing has risen slightly – 2% or $ 30.1 billion from a year ago.

Enrollment activity in China and Hong Kong followed a similar trend in the rest of the Asia-Pacific region, where IPOs also declined – but not so much, at 16%. Year after year. In the Asia-Pacific region, IPO revenue rose 18%.

The Asia-Pacific decline was less severe than global IPOs – with a 37% drop in the first quarter compared to a year earlier, or 321 inventories. Global IPOs raised $ 54.4 billion from January to March this year, down 51% over the same period.

According to EY, the global tumble was a change from the record height of 2,436 IPOs in 2021.

“A range of sudden reversal problems can be attributed,” EY said. These include growing geopolitical tensions, stock market volatility, as well as price revisions of overvalued stocks from recent IPOs.

The EY also blamed growing concerns about rising commodity and energy prices, the impact of inflation, and potential interest rate hikes; As well, “the COVID-19 epidemic risk is holding back a full-blown global economic recovery.”

Consistent with the sharp decline in global IPO activity, there has also been a “significant” decline in SPAC IPOs – a universal listing of companies pursuing special purposes.

The mega-list, which EY defined as revenue of over $ 1 billion, also fell. It said several IPO launches had been delayed due to “market uncertainty and instability”.

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