April 14–20, 2017 A3

FAN YU

ew York displaced Hong Kong as the world’s top destination for initial public offerings (IPOs) in the first three months of 2017.

A lack of major stock offerings sent Hong Kong—meaning the main Stock Exchange of Hong Kong (HKEX) and the Growth Enterprise Market (GEM) combined—to a distant fourth place, behind New York, Shanghai, and Shenzhen.

Global IPO activity was brisk overall in the first three months of 2017, with 369 total global IPOs raising $33.7 billion in proceeds—a 146 percent increase in proceeds from the same pe-riod in 2016, according to EY data.

The New York Stock Exchange led the way with $9.6 billion in total value from 14 issu-ances during the first quarter. By comparison, Hong Kong’s $5.3 billion first quarter value was an 11-year low, according to data from Thomsen Reuters.

Hong Kong was the leading destination for company stock offerings in 2015 and 2016. Last year, it hosted 115 deals with a total listing value of $25 billion, almost double that of New York, which listed $13.6 billion in IPOs, according to data compiled by EY.

Allowing Dual-Class SharesHong Kong’s lackluster IPO market perfor-mance so far in 2017 could help accelerate re-forms to listing rules.

Hong Kong Exchanges and Clearing chief ex-ecutive Charles Li announced at a press confer-ence in early January that the exchange is con-sulting stakeholders on the launch of a third stock exchange in Hong Kong in addition to the main HKEX and technology-focused GEM, ac-cording to the South China Morning Post.

The most talked about reform will likely be the allowance of dual-class share structure. Dual-class structure, which allows companies to have two classes of common stock with dif-

ferent voting rights, is popular with startups but is currently banned by Hong Kong exchanges.

The exchanges proposed allowing dual-class listing back in 2014, but the change was ulti-mately rejected by the Securities and Futures Commission, the city’s securities regulator.

A third stock exchange in Hong Kong, if ap-proved, would likely host companies with dual-class share structures.

Blockbusters Determine WinnersHong Kong’s rise as a leading IPO destination over the last few years is the result of increased IPOs for Chinese companies looking to expand their access to capital by tapping foreign inves-tors. Prior to the establishment of the recent Hong Kong–Shanghai and Hong Kong–Shen-zhen stock connect portals, foreign investors had limited exposure to Chinese companies.

The IPO of a single major company could of-ten swing the fortunes of a stock exchange. In 2014, Chinese e-commerce giant Alibaba Group Holding Ltd. chose to list on the New York Stock Exchange instead of Hong Kong, specifically because Hong Kong exchanges rejected Ali-baba’s dual-class share structure. Alibaba’s historic $25 billion IPO, which was the biggest ever, single-handedly propelled New York to the top of IPO rankings in 2014.

While the Asia–Pacific region led the way in IPOs during the first three months of 2017, ac-tivity was spread across several regions. Greater China was the busiest, followed by Japan and Australia. The biggest Asia IPO by proceeds was that of media company Sushiro Global Hold-ings Ltd., which raised $611 million in Tokyo.

The United States will likely challenge Asian exchanges for IPO superiority during the rest of 2017 due to several highly anticipated tech-nology IPOs. Airbnb Inc., Palantir Technologies Inc., and Uber Technologies Inc. are all 2017 IPO candidates, following Snap Inc.’s successful $3.9 billion IPO in March.

Last year was an especially underwhelming one for the U.S. IPO market. This was mainly due to lackluster stock market performance during the first half of the year and the mid-year shock of the United Kingdom’s decision to leave the European Union. After a slight bounce back, investors were skittish ahead of the U.S. elections. The volatile market conditions of 2016 forced some companies to push back their IPO plans.

The biggest U.S. listings in 2016 were the cross-border IPOs of Chinese logistics company ZTO Express Inc., insurance company Athene

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New York Overtakes Hong Kong as Top IPO Destination

BUSINESS

Hong Kong’s first-quarter value reached an 11-year low, while New York led the way with $9.6 billion in completed deals

Holding Ltd., and real-estate investment trust MGM Growth Properties LLC.

Biggest Year EverNext year may be the biggest IPO year ever. The top IPO destination of 2018 will likely be decid-ed by how Saudi Arabian Oil Co. chooses to list its shares.

Saudi Aramco is Saudi Arabia’s state-owned oil company. As part of the Kingdom’s plans for privatization, Saudi Aramco is exploring a 5 percent share offering in 2018. With an overall valuation of up to $2 trillion, Aramco’s 5 per-cent IPO will likely become the biggest in his-tory, raising up to $100 billion in proceeds.

The Saudis are exploring several listings across the United States, Asia, and the U.K., as well as locally on the Tadawul stock exchange in Riyadh.

Traders on the trading floor of the stock exchange in Hong Kong on Feb. 3, 2016. The exchange’s Q1 2017 IPO value of $5.3 billion is its lowest in 11 years.

Traders work on the floor of the New York Stock Exchange (NYSE) on June 28, 2016. New York became the No. 1 exchange in terms of overall IPO value in Q1 2017.

Hong Kong was the leading destination for

company stock offerings in 2015 and 2016.

369 IPOs (Q1 2017) GLOBALLY

SOURCE: EY

+92% VS. Q1 2016

33.7 BILLION RAISED (Q1 2017)

SOURCE: EY

+146% VS. Q1 2016$

Top IPOs in New York during

Q1 2017:

Snap ($3.9 billion)

Invitation Homes ($1.8 billion)

JELD-WEN Holding ($0.7 billion)

The IPO of Chinese

e-commerce giant Alibaba

Group Holding Ltd. at the

NYSE propelled the stock

exchange to the top of

IPO rankings in 2014.

ANTHONY WALLACE/AFP/GETTY IMAGES SPENCER PLATT/GETTY IMAGES

The FBI had obtained a secret court order to monitor the com-munications of Carter Page, The Washington Post reported on April 11. Page was allegedly a foreign policy adviser to Presi-dent Donald Trump’s campaign, which Trump’s team denies.

Page is an oil industry consultant and founder of Global Energy Capi-tal, a New York investment fund specializing in oil and gas industries in Central Asia and Russia, and his business deals with Russian oil companies have been used to accuse the Trump campaign of having had dealings with Russia.

The news also adds evidence to the investigation into whether the Obama administration spied on members of Trump’s campaign—and whether it was for political purposes.

Ex-Iranian President Mahmoud Ahmadinejad submitted his name on April 12 for registration as a can-didate in Iran’s presidential election in May, state media reported.

Although the move by the former hardline president was seen as an attempt to bolster the candidacy of an ally, it was also a challenge to the authority of Iran’s Supreme Leader Ayatollah Ali Khamenei, who had ordered him not to run.

Registration for the May 19 election started on April 10 and will last five days.

FBI Obtained Warrant to Monitor Trump Adviser

Ex-Iranian President Submits His Name for Presidential Election

Growing numbers of African migrants passing through Libya are traded in what they call slave markets before being held for ransom, forced labor, or sexual exploitation, the U.N. migration agency said on April 11.

West African migrants inter-viewed by the International Orga-nization for Migration (IOM) have recounted being bought and sold in garages and car parks in the south-ern city of Sabha, one of Libya’s main migrant smuggling hubs.

Migrants are traded for be-tween $200 and $500 and are held on average for two or three months, Othman Belbeisi, head of the IOM’s Libya mission, told journalists in Geneva.

Migrants Traded in ‘Slave Markets’ in Libya, UN Agency Says

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