Hong Kong sees uptick in IPO applications year to date with interest rates poised to decline, HKEX CEO says

Hong Kong has received 30 per cent more applications for initial public offerings (IPO) year to date than in the same period a year ago, as more start-ups seek to raise capital with interest rates poised to decline, indicating a turnaround in the market.

“We have about 30 new IPO applications year to date,” and the pipeline including renewals rose to almost 40, said Bonnie Chan Yiting, in her first media briefing since taking over as chief executive of Hong Kong Exchanges and Clearing (HKEX) on March 1. “Companies are still very interested in pursuing a listing in Hong Kong.”

Chan, formerly co-chief operating officer of the bourse operator, took over from Nicolas Aguzin. Her appointment came at a tough time, as both market turnover and new listings dropped last year due to high interest rates and rising geopolitical tensions.

Daily turnover in stocks tumbled 16 per cent to HK$105 billion (US$13.4 billion) in 2023, exchange data showed. The proceeds arising from stock offerings of newly-listed companies fell by more than half to a 20-year low of US$5.9 billion in 2023, based on Refinitiv data.

Who is Bonnie Chan, first woman CEO of Hong Kong stock exchange operator HKEX?

“We have seen positive signs in the stock market over the past two months,” said Chan, pointing out that the amount international investors invest in the mainland market through the northbound stock connect rose to 130 billion yuan (US$18.08 billion) on average per day in the first two months this year, up about 40 per cent.

“This shows that international investors still want to invest in the potential growth of the China story,” she said. “We have been working very hard on attracting more companies to list in our market and more investors to participate in our market.”

Chan, the first female CEO to head the local stock market since it began operations in 1891, said the regulator has a key role to play in promoting gender diversity in corporate boards.

“Since HKEX introduced a rule to ban single-gender boards in 2022, a few hundred new female directors have joined the boards of listed companies, and the trend will continue,” she said in a forum on International Women’s Day.

Since 2022, HKEX has required that all new listing candidates have at least one woman on their boards at the time of going public. Existing listed entities need to appoint at least one woman on their boards by 2025.

The number of Hong Kong-listed companies with an all-male board has decreased by 11 percentage points over the last two years.

Separately, Ayesha Macpherson Lau, chairwoman of pensions regulator Mandatory Provident Fund Schemes Authority (MPFA), urged women to better prepare for their retirement as they tend to live longer than men.

There are about 31,000 tax-deductible contribution Mandatory Provident Fund (MPF) accounts held by women at the end of last year, 25 per cent fewer than for men, Lau said in a blog on Thursday.

“The average life expectancy for females in Hong Kong is 87.9 years, which is 5.4 years longer than for males, suggesting that females need larger retirement reserves to support a longer retirement life,” Lau said.

“Women should more proactively make use of MPFs for retirement planning from the early stages of their working lives, and make tax-deductible voluntary contributions,” boosting potential payouts at retirement age, said Lau.

The MPF is a compulsory retirement scheme in Hong Kong which requires employers and employees to contribute a combined HK$3,000 per month, but members can opt to contribute more and get tax deductions.