Despite the raging impact of inflation in various economies, monetary authorities are not sitting on their laurels, rather they are fighting the surge through frequent interest rate hikes.
hong kong initial public offering (IPO) market has failed to recover from its subdued sentiment after the relatively unsuccessful listing of Chinese liquor company ZJLD Group. As informed of By CNBC, shares of ZJLD Group plunged as much as 18% on their first day of trading on April 27, indicating just how much trust is lacking in the industry.
Last year was a very turbulent year for the global financial ecosystem as skyrocketing inflation rocked almost every economy. With fiat currencies losing their intrinsic value, many investors have gone on the sidelines chasing safe assets that can at least help preserve capital. While most stock markets saw a battery last year, Hong Kong was of particular interest.
Known as a major financial center in the Asia-Pacific region, the slowing growth of the stock market shows that the economy is far from returning to normal levels.
“IPO markets are yet to deliver on sentiment,” Ringo Choi, Asia-Pacific IPO leader at EY, said in a statement, adding that “a lot of industries are suffering at the moment.”
Choi said Hong Kong tech companies are facing major pressure from US-China economic and trade tensions. Additionally, he believes that the poor outlook also stems from falling prices of electric vehicles in the region.
Since the pandemic, valuations of companies have been declining and the current economic climate makes it impossible to see these impressive levels again anytime soon.
“Valuations have not gone up at this point in time as compared to two to three years ago. We still need some time,” said Robert Lui, Hong Kong offering leader, Deloitte China Capital Market Services Group.
The impact of the interest rate hike on the Hong Kong IPO market
Despite the raging impact of inflation in various economies, the monetary authorities are not sitting on their toes, rather they are fighting the relentless surge. interest rate hike, With the Hong Kong stock and the IPO market, in general, down 15% in 2022, it was deemed one of the worst performers for the year.
One of the key factors that experts have highlighted is the impact of China’s zero-Covid policy as well as the uncertainty that comes with interest rate hikes.
“The concerns are still about the high interest rate environment and much of the focus in the Greater China region is about the recovery of the economy,” said Irene Chu, partner at KPMG China.
Despite this gloomy outlook, experts are optimistic that 2023 will be a turning point for the Hong Kong stock market. This bullish sentiment is notably shared by the trio of Deloitte China, EY and kpmg, The reassurance stems from the fact that the Chinese and Hong Kong borders are now reopening for trade more relaxed rules Which can generally drive growth in the short to medium term.
Benjamin Godfrey is a blockchain enthusiast and journalist who loves to write about real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain-based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
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