Hong Kong recorded a marked increase in listing activities this year, as more Chinese companies flocked to the city to raise capital and investors grew optimistic after Beijing pledged to support the offshore market.

The Hong Kong Stock Exchange saw new listings jump for the first time after three consecutive years of decline, in terms of trading values, according to data compiled by Dealogic. This included initial public offerings and additional follow-on share sales.

The city's bourse raised a combined $10.65 billion across 63 deals this year, marking a significant increase of more than 80% compared to the $5.89 billion raised across 67 in 2023 - which was the lowest since 2001, according to Dealogic.

In another sign that companies and investors are regaining confidence in the Hong Kong market, the average deal size almost doubled from the previous year to $169 million.

The number of firms seeking public flotation in Hong Kong started to increase in the second half of this year, as the Chinese securities regulator in April promised to support the Hong Kong market and facilitate more IPOs from the mainland's leading companies.

Experts said the stimulus package being increased by Beijing further strengthened the interest of companies raising capital in the offshore city and attracted some foreign capital funds.

Looking at IPOs alone, Hong Kong is expected to rank fourth globally in terms of funds raised this year, according to KPMGfollowed by India and the US stock markets.

"There is a lot of demand to raise capital" from 2022, when the city's economy has sought to shake off a slowdown caused by the pandemic, Andy Maynard, managing director and head of equities at China Renaissance, said in an email. .

Despite some "signs of life," Maynard warned that only when "we see continued improvement in the economy on the ground and geopolitical tensions continue to ease" can one expect a further pick-up in Hong Kong's IPO activities.

For years, the listing activity in the Asian financial center had declined as geopolitical tensions and higher interest rates globally have reduced investors' appetite to buy into Hong Kong and Chinese equity capital market deals.

China's economic slowdown and a severe housing market crisis have also raised concerns among issuers and investors about company valuations.

Investor sentiment has improved this year, especially toward sectors that benefit from policy support, such as consumer-related businesses, said Qing Wang, president and chief strategist at Shanghai Chongyang Investment Management.

Midea Group, which sells air conditioners, washing machines, elevators and other consumer products, in September clinched the city a larger list from the beginning of 2021. Its Hong Kong-listed shares have jumped more than 36% from its offer price, as investors remain hopeful of its position to benefit from Beijing's "trade program", aimed at encouraging consumers and businesses to upgrade existing equipment and devices.

It was there 90 IPO applications pending for listing or under processing as of November 29 according to the exchange's website.

While the city may see a more active IPO pipeline in 2025, it is likely to be a "gradual recovery" rather than a "V-shaped" one, said John Lee, vice president and co-head of coverage of the Asian country in UBS global. banking Asia.

So far this year, mainland investors have bought $96.4 billion of Hong Kong stocks, surpassing last year's total of $42 billion and heading for the biggest year of $87 billion in purchases. spree in 2020, according to data from Goldman Sachs.

"There is also a return of long-only foreign (funds) to China (and) Hong Kong equities, although the pace is gradual," said Perris Lee, head of APAC equity capital markets. at Ion Analytics.

Not all newly listed stocks traded well. Chinese self-driving firm Horizon Robotics and bottled water maker China Resources Beverage — the two biggest IPO deals in the city this year — saw their shares fall 12% and 11%, respectively , from Wednesday of the offer price levels.

Investors need to see "concrete evidence of the effectiveness of the stimulus policy", said Wang of Shanghai Chongyang. He expects some improvement in sentiment early in the second quarter of next year when public companies start releasing earnings.

The benchmark Hang Seng Index is on course for its first annual gain after four straight years of decline, rising more than 16% so far this year.

That said, the rally, fueled by Beijing's massive stimulus package at the end of September has lost some of its momentum.

Looking ahead, China Renaissance's Maynard said that while the Hong Kong stock market may have turned the corner, he saw "no prospect of a Santa rally." The market remained "captured and bound to a range" as Beijing's stimulus announcements from September eased.