Benson Wong Wai-bong (left), entrepreneur group leader at PwC Hong Kong, and Eddie Wong Kam-chin, capital markets services partner at PwC Hong Kong, pose for a photograph holding copies of PwC’s latest report on the IPO market during the report's launching in Hong Kong, China, Jan 2, 2024. (PROVIDED TO CHINA DAILY)

PwC expects the Hong Kong Stock Exchange to raise over HK$100 billion ($12.8 billion) in IPO fundraising pool this year, benefiting from the relaxed listing rules for specialist technology companies and its international capital market expansion. 

According to PwC’s latest report on the IPO market, released on Tuesday, around 80 companies are expected to list in Hong Kong in 2024. 

Under the new rules, the minimum market capitalization for listing on the main board has been set at HK$6 billion. HKEX has lowered the market cap requirement for nonprofit firms to list, from HK$15 billion to at least HK$10 billion

The total funds raised by these firms will propel the international financial hub back into the top three global financing markets this year. The report provides a year-end review for 2023 and an outlook for 2024.

READ MORE: Deloitte: HK IPOs expected to raise around HK$400b in 2021

The PwC report said the implementation of the Chapter 18C listing regime “will help connect specialist technology companies with international funds, bringing new opportunities to technology companies and the Hong Kong stock market”.

Effective from March 31, the new listing rules set a lower threshold for advanced technology companies, such as firms in the fields of cloud computing and artificial intelligence, semiconductors and the metaverse. 

Under the new rules, the minimum market capitalization for listing on the main board has been set at HK$6 billion. HKEX has lowered the market cap requirement for nonprofit firms to list, from HK$15 billion to at least HK$10 billion.

PwC noted that the city’s bourse operator is making strides in IPO market reforms, including the regulatory overhaul on GEM board and the creation of FINI — a digital IPO settlement platform. 

With Hong Kong accelerating market interconnections between ASEAN and the Middle East — key sources of capital for the stock market — these efforts are expected to gradually yield results and contribute to a more diversified Hong Kong IPO market, the report said. 

With the end of the rate hike cycle and the possible beginning of interest rate reduction in the second quarter, capital from Europe, the United States, and the Middle East is expected to return to Asia, increasing market liquidity and improving valuations, it added. 

Benson Wong Wai-bong, entrepreneur group leader at PwC Hong Kong, predicted three to five specialist technology companies will list in Hong Kong through Chapter 18C in 2024. 

“Specialist technology companies in fields such as semiconductors and AI have great potential and have attracted attention from the market. With interest rate divergence, the listing of Chinese concept stocks and companies in the form of specialist technology companies in Hong Kong after a valuation rebound will contribute to the stability of the capital market and boost market confidence,” Wong said. 

READ MORE: HKEX to launch digital IPO settlement platform on Nov 22

In 2023, HKEX recorded 73 IPOs, marking a 19 percent decrease from the previous year. Total fundraising amounted to HK$46.3 billion, representing a 56 percent plunge year-on-year.

Thirty local brokerages closed down last year, after a record 49 shut up shop in 2022, according to Hong Kong stock exchange data. The closures kicked in as the Hang Seng Index fell 14 percent in 2023 and its stock market logged the worst year for IPOs since 2001.

On the first trading day in 2024, Hong Kong’s benchmark stock index closed at 16,788.55, down 1.52 percent.  The Hang Seng Tech Index — a gauge of Chinese tech shares traded in Hong Kong fell 1.32 percent to 3,714.77.

Contact the writer at tianyuanzhang@chinadailyhk.com