Hong Kong might have cause to celebrate the PWC report: 97% of the funds raised in the Greater China region were raised in the SAR. Yet it also has much to fear. Always an emotional and volatile market, the Hang Seng Index whipsawed its way through early May after global market wobbles.
“After the first 400 points drop last week, people said: ‘OK, it’s a correction’,” says one equity syndicate head. “It fell another 200, went up 400 and now’s it’s down another 400. That’s going to hurt. People are scared.”
In the longer term, they might have more to fear from China itself, at least as far as attracting new listings goes. China’s securities regulator, the CSRC, announced in May a lifting of its ban on domestic IPOs. Its efforts to reform the capital structures of existing listed companies have paid off, paving the way for an opening of the new issues market after the Shanghai index, the largest domestic market, jumped sharply in May. Initially dual domestic and Hong Kong listings will be the order of the day. As the local market deepens, however, some domestic companies might dispense with a Hong Kong listing altogether.