One of the main sources of new wealth are floats of companies on the stock market, and IPO data from Hong Kong has encouraging news for wealth managers courting those who benefit from the process.

Wealth managers eyeing potential liquidity events and sources of new clients will have been cheered to read that the market for initial public offerings in Hong Kong saw a rapid rise in the number of flotations and the value of IPOs in the first half of this year.

In the first half of 2017, there were a total of 72 new listings in Hong Kong – an 80 per cent increase on the same period last year. Total funds raised reached HK$53.6 billion ($7.12 billion), increasing 23 per cent from a year earlier, according to a report by PricewaterhouseCoopers.

There was a stronger performance on the GEM [General Enterprise Market] board, which recorded 35 IPOs and HK$ 2.6 billion of total fundraising, a rise of 133 per cent in number of companies and 136 per cent of funds raised. 

There were 37 new listings on the main board within the period, with total funds raised standing at HK$ 51 billion. This is a 48 per cent increase in IPOs and a 20 per cent increase in funds raised. Companies seeking IPO are mainly from industrial and retail, consumer goods and services industry. 

“We saw significant growth in the IPO market in the first half of 2017, comparing year on year. We credit this to improving market sentiment and economic conditions, which has also enhanced the quality of Hong Kong’s capital markets,” Eddie Wong, PwC Hong Kong Capital Markets Service Partner, said. 

PwC said it predicted that a “vibrant IPO market” driven by small- and medium-sized enterprises could result in a record-breaking 150 IPOs over the course of the year. There is still a chance of some mega-sized IPOs before the end of the year, making Hong Kong one of the three strongest markets globally, with total fundraising of HK$220 billion. 

There are grounds for caution, however.

“The second half of 2017 could be more challenging. Market sentiment may be affected by economic and political risk factors around the world. The slow pace of economic recovery, geopolitical issues and the progress of Brexit will continue to dampen companies’ fundraising prospects as well as investors’ intentions,” Benson Wong, entrepreneur group leader, PwC Hong Kong, said. “We also expect a slowdown in IPO activity in Mainland China after a spurt of listings in the first half of the year. All the above issues and concerns are affecting the Hong Kong IPO market. Luckily, the Chinese economy is still maintaining mid-to-high growth, which is encouraging the development of Chinese companies and increasing demand for fundraising,” Wong said.