Smoother road seen to listings in Hong Kong after a bumpy ride this year
An erratic year for initial public offerings causes volatility in a market hurt by poorly performing mainland stocks, writes Alex Frew McMillan
It has been a schizophrenic year for the equity capital markets, with initial public offerings being pulled day after day at one moment, only for the gates to open on share offerings weeks later.
The main cause has been the intense volatility of the Hang Seng Index, which has been hurt by three years of poor performance by mainland stocks and, this year, the mainland's slowing economy.
Hong Kong was also hammered along with the rest of Asia following Ben Bernanke's announcement that the United States Federal Reserve was looking to scale back bond buying under its quantitative easing programme.
Following that shock on May 22, the Hang Seng Index fell 16 per cent, bottoming out on June 24. It took until September 19, and the surprise that the Fed did not scale back its US$85 billion monthly bond purchases, for Hong Kong stocks to recover.
"There have been a couple of false starts for the market, particularly for IPOs in Hong Kong," said Damien Brosnan, the head of the Asia equity capital markets syndicate at UBS. "You can only launch and price an IPO so quickly. Earlier this year, there were several deals that were pulled because their pricing dates were on the wrong side of that window."
