All Eyes On Hong Kong as It Prepares for Busy Week of IPO's

Peijia Medical and Central China will look to raise more than $500 million next week.

Author: Anthony Russo   

It will be a busy month for Hong Kong as it gets set to launch two sizeable IPO's on its stock exchange.

By the end of this week, the Biotech firm Peijia Medical Ltd. will price its IPO, seeking to raise up to $302 million, while the property management company Central China New Life Ltd. aims to raise $279 million. The firms are expected to begin trading on May 15; the city hasn't had a week with IPO's worth more than $500 million since early January.

The IPO market in Hong Kong appears to be heating back up after Covid-19 scared some companies away from listing. Despite the city relaxing its listing rules, there has been just $2.45 billion worth of IPOs in 2020 compared with $4.27 billion in the same period in 2019, according to data from Refinitiv. 

Some others exploring trading in Hong Kong are e-commerce giant Inc., (Nasdaq: JD) seeking to raise $2 billion and the tech conglomerate NetEase, Inc., (Nasdaq: NTE), which has filed secondary listing in the city, according to Bloomberg. Both have filed confidentially. 

The IPO's come as Hong Kong has posted its worst quarter since 1974, as the economy shrank 8.9% year-over-year. Meanwhile, the city has now gone more than two weeks without reporting a local infection. On Wednesday, the Hang Seng Index rose 1% to 24,137.48 points.

In New York, all eyes will be on Kingsoft Cloud Holdings Ltd., which will aim to raise up to $450 million on Friday in its IPO. It'll be interesting to see how American investors welcome the Hong Kong-based company, as the head of the Securities and Exchange Commission Jay Clayton has warned over accounting fraud when betting on Chinese companies. though he was referring mostly to companies from the mainland. 

Expect activity to continue to surge in the Hong Kong market. According to a report by the Deloitte China's National Public Offering Group last month, it projects Hong Kong to have around 160 IPOs with the proceeds ranging from HKD$160 billion to HKD$220 billion for the full year 2020.