China's economic slowdown, a sweeping regulatory crackdown that has tightened scrutiny over companies' fundraising outside mainland China and geopolitical tensions have all resulted in a bleak year for new listings in Hong Kong.
In recent years, anti-government protests, the imposition of a sweeping national security law, and punishing COVID-19 containment measures have also clouded Hong Kong's status as a premier financial centre.
Public floats by Chinese companies account for most of the IPOs in Hong Kong, one of the top listing venues globally and a major driver of revenue and fee income for the world's biggest investment banks.
Roughly $6 billion has been raised via 50 IPOs so far this year in the Asian financial hub, Refinitiv data shows, down sharply from more than $25 billion in 2021. The bourse is on course to see its lowest IPO proceeds in a decade.
"I am quite confident that the IPO market activity will return very quickly in the new year," Hong Kong Exchanges and Clearing Ltd (HKEX) Chairman Laura Cha said in an interview at the Reuters NEXT conference.
"Currently, we have over a hundred companies in the pipeline. Many of them are waiting for the market sentiment to improve so that their valuations could be better when they come to the market," she said.
While Cha expects Chinese companies, mostly those from the new economy sector, to revive their capital raising plans in Hong Kong, HKEX is also looking to attract others from elsewhere to burnish its credentials as an international platform.
On the radar are prospective investors and issuers from the Middle East and Southeast Asia.
"We are trying to broaden our international footprint in terms of the products that we are offering," she said. "In other words, we will make ourselves much more diversified (with) many more international companies and that will be our strategy."
International investors account for about 42% of investments in Hong Kong's equity market, and that share is "a lot higher" in the derivatives market, Cha said. "So, we are already international in nature, but we will continue to expand that."
Years of strict COVID restrictions have also badly hit Hong Kong's economy, but the city has lifted most of its curbs in the last couple of months.
"With COVID restrictions being removed, almost completely now, and the financial markets also performing well, I think we will be able to continue to attract new talents into Hong Kong," Cha said.
"So for us, there was, like the rest of Hong Kong, a higher attrition rate about 12 months ago, and that has come down now."
(To view the Reuters NEXT conference live on Nov. 30 and Dec. 1, please click here)
(Reporting by Sumeet Chatterjee; Editing by Ana Nicolaci da Costa)
By Sumeet Chatterjee