2020 is a year full of turbulence. The COVID-19 epidemic and the turbulent political and economic situation all affect the performance of the global market. Even so, 2020 will be a bumper year for Hong Kong's capital markets. With the strong return of Chinese stocks, Hong Kong stocks raised more than HK $390 billion in IPO, a big increase of more than 20% over 2019. Among them, Haitong International ranked the sponsor list of Hong Kong IPO market in 2020.(00665) and China International Capital CorporationWhat's more, Citic Lyon ranked fifth in the top three, on a par with foreign investment giants such as Goldman Sachs Group and Morgan Stanley.
Hong Kong's IPO market is hot in 2020
A total of 144 new IPO projects were added to the Hong Kong market in 2001, raising more than HK $397.5 billion
The IPO of the Stock Exchange of Hong Kong (HKEX) ranks second in the world in terms of capital raised, second only to NASDAQ.
Among the top 10 IPO projects in the world, HKEx has three exclusive orders: JD.com Group and JD HealthAnd NetEase, Inc Company
As an international financial and trade centre, Hong Kong has always been the preferred place for Chinese enterprises to "go global". With their understanding of the local market, Chinese investment banks have become the forefront of Hong Kong's capital market in recent years, replacing foreign banks as the first choice for enterprises to list in Hong Kong.
According to Bloomberg, Chinese investment banks accounted for 16 of the top 20 IPO issuance markets in Hong Kong in 2020. In terms of the number of projects, Chinese investment banks occupy the top 10.
Investment banks go out to sea, the "two China and one sea" three giants have become a pattern.
Chinese investment banks have actively expanded their IPO sponsor business in recent years. Between 2019 and 2020, Chinese investment banks participated in more than half of the Hong Kong IPO projects recommended, according to Ryan Capital. Among more than 30 Chinese sponsors, China International Capital Corporation, CITIC Lyon and Haitong International (00665) are among the top three in the number of sponsored projects and the total amount of funds raised, and the total amount of IPO projects sponsored by these three investment banks has accounted for nearly 70% of the total amount of funds raised by Hong Kong IPO in the past two years, forming a pattern of "two China and one sea".
Of the 144 Hong Kong-listed IPO in 2020, a total of 63 investment banks have participated in the recommendation work, of which 26 are Chinese securities firms and 14 are foreign investors.
According to the ranking analysis, the number of sponsors of Haitong International (00665) has more than doubled over last year and jumped to the third place with Morgan Stanley. Haitong International also ranked first on the Hong Kong IPO underwriting list with 51 Hong Kong IPO projects. Although the number of China International Capital Corporation sponsors dropped slightly, she still maintained the top position with 15 sponsor projects. It is worth noting that the ranking gap between Chinese investment banks and foreign investors has gradually narrowed. Citic Construction, the top five Chinese investment bank, only follows Haitong International and Morgan Stanley with the difference of one project. Chinese-funded institutions led by CICC and Haitong International (00665) account for half of the total, with six on the list, while foreign investors only occupy four seats.
Among the top 10 global IPO projects listed in Hong Kong in 2020, "two China and one Sea" all participated in sponsorship: China International Capital Corporation sponsor NetEase, Inc IPO, CITIC Lyon sponsor JD.com Group IPO, Haitong International sponsor JD Health IPO. No matter in the number of projects recommended, the industry sector, the project scale and so on, it shows that Chinese investment banks have greatly improved their experience and ability in sponsoring business, and are competent for large-scale international IPO projects.
Looking back at Hong Kong's capital market in recent years, Chinese investment banks have long been in the forefront, competing with foreign investment banks. Among them, the promotion of the environment of "harmony between the time, the earth and the people" is essential: China's economic growth has remained stable, with an annual GDP growth rate of more than 6 per cent in the last decade, substantially ahead of the global GDP growth rate of only about 2-3 per cent; the rise of outstanding enterprises in different sectors, and a large number of financing needs have created good development opportunities for Chinese investment banks; and the return of US-listed stocks in 2020 is a major boost to further growth. In addition to the general environment, a number of Chinese investment banks have shown growing comprehensive strength and influence over the past two decades. Internal and external favorable factors create the best development era for Chinese investment banks.
Affected by COVID-19 's epidemic, the World Bank predicts that global GDP will decline by 5.2% in 2020, the biggest drop since World War II. However, China's economy and Chinese enterprises outshine others, and IMF predicts that China may become the only economy to achieve GDP growth in 2020. With the rise of more Chinese-funded enterprises, the return of Chinese-listed stocks, and the deepening of market connectivity between the mainland and Hong Kong, how Chinese investment banks will continue to promote international development and what strategies to continue to compete head-on with foreign banks deserve market attention.