The IPO market in the Chinese mainland and Hong Kong saw a slow first half in 2016 with investors wary of the economic slowdown on the mainland and the possibility of a currency devaluation, a report released by EY showed on Tuesday.
As a result, there were 101 IPOs, down from 232 IPOs in the same period in 2015. Capital raised was also down, to $10.5 billion from $40.4 billion. However, the outlook for the second half of the year is more positive with a strong IPO pipeline in both the mainland and Hong Kong.
The Hong Kong and Shenzhen stock exchanges were the two most active stock exchanges globally in the first half of this year by the number of deals.
The Hong Kong exchange led globally by capital raised. Hong Kong's main board saw three of the 10 largest IPOs globally in the first half of this year.
Terence Ho, EY Greater China Strategic Growth Markets and IPO Leader, said in a note sent to the Global Times that the Hong Kong IPO market has been relatively quiet this year due principally to uncertainty around another rise in US interest rates and concerns over the slowdown in China's growth rate.
According to the report, in the first six months of 2016 there were 23 IPOs on Hong Kong's main board, raising $5.5 billion in proceeds, which represented declines of 26 percent and 67 percent respectively from the same period in 2015.
The report said telecoms, media and technology, along with financials, construction, and retail and consumer products, were the most active sectors, driven by a number of IPOs of smaller companies.
However, in terms of funds raised, financials dwarfed other industries with mainland banks eager to get listed to access the capital needed to fuel their growth. Often, the route to an A-share IPO take relatively longer, leading many mainland city banks to look at Hong Kong instead.
Commenting on the UK's vote to leave the EU, Ho said increased uncertainty about the impact that the vote will have on listing legislation, as well as the expected devaluation of the pound, is likely to hold activity back.
