Futu Remains Top of Hong Kong IPO Underwriting List with its Inaugural IPO Insight Report Launched

(Hong Kong – February 1, 2024) Futu Securities International (Hong Kong) Limited (“Futu”), a leading tech-driven digitalized brokerage and wealth management company, announces that it concluded 2023 by providing underwriting services to 37 Hong Kong-listed companies[1], achieving the top spot for the second consecutive year through Futu I&E[2], its corporate and institutional services brand. Based on its long dedication to the IPO business, Futu I&E has recently released the "Hong Kong and US IPO Insight Report 2023" (The "Report"), shedding light on the trends to watch in both IPO markets.

By incorporating data analysis and professionals' viewpoints, the report offers insights into the review and outlook of the IPO markets in Hong Kong and the US. In 2023, the Hong Kong stock market witnessed a decline in both IPO numbers and proceeds raised. However, with a substantial pipeline of IPO projects, with over 110 companies planning to list on the Hong Kong Stock Exchange, the market is poised for growth. The healthcare and information technology sectors are anticipated to be the key drivers of the Hong Kong IPO market in 2024. In the US stock market, thanks to the CSRC filing regime for overseas listings ("New Filings Regulation") announced in February 2023, a total of 36 China Concept Stock IPOs were launched within the year, accounting for 21.8% of the total number of new listings in the US. This figure surpasses the quantity and scale in 2022 during the same period, showcasing an upward trend in China Concept Stock IPOs in the US. Furthermore, experts from law firms and exchanges generally expected the IPO market in 2024 to gradually recover due to favorable conditions such as the Federal Reserve's interest rate cuts, regulatory policies, and sufficient overseas reserve projects.

Information Technology and Health Care Accounted for Over 45% of the Total Number of HK Listing Applications

As an inaugural "Hong Kong and US IPO Insight Report 2023" released by Futu I&E, it showcases the landscapes of market dynamics and development trends for 2024. The report finds that while the Technology, Media, and Telecommunications (TMT) sector continued to lead the Hong Kong IPO number over the past two years, the sector's total fundraising was lackluster. In 2022 and 2023, the TMT sector ranked 1st and 2nd in terms of the number of IPOs, but stood at the 5th and 3rd in terms of total fundraising, with an average amount of HK$395m and HK$467m, respectively.

On March 31, 2023, the Hong Kong Exchange's new rules for listing of Specialized Technology Companies (often referred to as "18C") officially came into effect, allowing Specialized Technology Companies that had not yet met the main board listing requirements to list in Hong Kong. According to disclosures of listing applications, two companies had submitted listing applications to the Hong Kong Exchange under the 18C regulations, and companies from the information technology and healthcare sectors accounted for over 45% of all applications, indicating that these two industries will drive the 2024 Hong Kong IPO market.

While the rebound of the Hong Kong IPO market remained slow last year, 89% of IPOs were oversubscribed, up 1% from 2022, with over 16% subscribed more than 20x, exceeding 10.7% in 2022. Additionally, the Hong Kong Exchange launched the FINI platform in November last year, which shortened the time taken from IPO pricing to trading of shares to two business days. An expert from a law firm believed that it would benefit investors by reducing IPO financing costs thus attracting more investors, especially retail investors, to subscribe to new shares.

China Concept Stocks Showed a Notable Resurgence in US IPOs

As a result of the more moderate approach to Sino-US audit regulation and the improved filing procedure, the US saw a total of 36 China Concept Stock IPOs, accounting for 21.8% of all US IPOs for the year, with fundraising reaching US$ 841m, compared to only US$ 582m across 18 IPOs in 2022. The report highlights that the first and fourth quarters saw a surge in IPO fundraising for China Concept Stocks, accounting for 81.4% of the total funds raised.

The data finds that 33 Chinese companies debuted on Nasdaq, while three completed their IPOs on the New York Stock Exchange last year. Notably, the average fundraising amount for Chinese companies' initial offerings in 2023 was relatively lower, standing at US$ 24m. The majority of fundraising amounts fell within the range of US$ 5m to US$ 6m, with 22 companies raising less than US$ 10m, representing 61.1% of the total.

Industry experts generally expected the US IPO market to gradually warm in 2024 due to some positive factors such as the US election year, enhanced expectations of Federal Reserve rate cuts, and the maturity of the CSRC overseas filing process. Additionally, due to the subdued market conditions over the past two years, many companies postponed their IPO timing. The backlog of IPO projects seeking to list in 2024 is also expected to boost the US IPO market amid overall positive expectations.

Futu Maintained Top Position in Hong Kong IPO Underwriting, Achieving Outstanding Results

As of 2023, Futu had provided IPO services to nearly 300 companies[1], spanning industries such as TMT, Healthcare, and consumer sectors. Among the top 10 fundraising projects of the Hong Kong IPO market in 2023, 7 of them had Futu as their underwriter. A total of 55.9% of IPO projects on Futu's platform received oversubscriptions. Furthermore, 60% of companies with a market capitalization exceeding HKD 10b (as of December 31, 2023) had collaborated with Futu on their IPOs. Additionally, Futu served as the book runner for 21 companies, ranking 7th in the industry.[2]

Andrew Sun, Partner at Futu I&E, stated, "While the Hong Kong stock market faced significant challenges in 2023, Futu's continued success amidst this backdrop is attributable to the recognition of numerous companies and serves as the best proof of Futu's IPO service capabilities. With macroeconomic conditions expected to improve this year, an accelerating domestic recovery, and the implementation of various policies for the Hong Kong stock market, we anticipate a revitalized new stock market in Hong Kong.

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[1] Services provided by licensed subsidiaries of Futu Group

[2] Services provided by licensed subsidiaries of Source: Wind

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