(Yicai) Jan. 4 -- The Hong Kong Stock Exchange dropped out of top five for global initial public offerings last year, but with the introduction of new trading mechanisms and listing rules the bourse may be about to turn the corner, according to analysts.

New listings on the HKSE and the amount they raised hit a 20-year low in 2023. New listings fell to 70 from 94 in 2022, while its Growth Enterprise Market has not seen any new listings in nearly three years, Yicai calculated. About 40 percent of the bourse’s IPOs were priced at the low end, while the shares of more than half fell on their first trading.

The capital banked by the new listees plunged 59 percent to HKD37.7 billion (USD4.8 billion) last year, figures from Deloitte showed. 

The HKSE's overall liquidity has also been shrinking, with average daily trading volume of just HKD113.6 billion (USD14.6 billion) in the seven months ended July 31, down 32 percent from the average daily level in 2021, according to the bourse’s data.

Set against this, the HKSE came out with new policies on trading mechanisms and listing rules last year. It also cut stamp duty to 0.1 percent on Nov. 17, while reforms to make it easier for small and mid-sized companies to migrate to the main board from the GEM took effect on Jan. 1. 

And with Co-Chief Operating Officer Bonnie Chan taking over as the stock exchange’s chief executive in May, some industry insiders predict further reform measures from the new leadership team.

The HKSE may seize opportunities this year due to the easing of geopolitical conflicts, the improvement in China-US relations, and anticipated interest rate cuts in the United States, said Wang Chao, chief strategy analyst at China Galaxy Securities.

The continuous rise in overseas interest rates has been the main reason for the outflow of funds and lack of liquidity in the HKSE, according to Wang Xueheng, chief analyst of overseas strategy research at Guosen Securities. The good news is that this trend will likely reverse soon, Wang pointed out.

“With the intensification of policy stimulus and the certainty of declining interest rates overseas, the fundamentals of the HKSE are on the road to recovery,” according to Wang.

Editor: Martin Kadiev