Morning Coffee: Hong Kong bankers brace for horror second half

If you work in equity capital markets (ECM) in Hong Kong you were, until recently, probably expecting the rest of the year to be busy, following surging IPO volumes in the first half. Now the next few months look decidedly dicier for Hong Kong bankers focused on local listings.

Hong Kong’s IPO market, unlike the mainland’s, is still open for business, but analysts are now saying that China’s ongoing stock market rout will squeeze the volume of listings in Hong Kong. “It’s going to destroy Hong Kong’s IPO market,” Alex Wong, a Hong Kong-based asset-management director at Ample Capital, told Bloomberg. “I’d expect many of them to pull their listing plans.”

“The Hong Kong IPO market was supposed to see a huge uptick in the second half, but now we may have to wait,” added Paul Pong, a managing director at Pegasus Fund Managers. “Many of those IPO candidates are likely to hold back, or they will have to accept a much lower valuation if they decide to go ahead.”

Hong Kong has been a major source of fees in Asia this year after the Singapore exchange failed to register a single IPO above US$25, reports Bloomberg. Banks in Hong Kong, who may have been forced to beef up their ECM ranks had China’s bull run continued, will now be doing very little ECM hiring this summer.

Meanwhile:

China market rout was predictable, says BAML. (South China Morning Post)

Strong finance sector helps Hong Kong rank third in new World Bank report. (China Topix)

China stock rout has big implications for the rest of Asia. (Straits Times)

UBS China investment bank co-head Cai said to join FountainVest. (Bloomberg)

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