IPOs are important creators of HNW individuals as businesses go public and evidence shows that globally, the pandemic has hit activity, with the notable exception of China and Hong Kong.

The global pandemic hit international markets for initial public offerings, which are important liquidity events minting new high net worth individuals, new figures from EY, aka Ernst & Young, said in a report. However, mainland China and Hong Kong bucked the move.

The volume of stock market flotations shrank by 32 per cent to $41.1 billion over the second quarter of 2020 from a year earlier. The number of IPOs fell as much as 39 per cent to 186, EY said.

In Europe and the US, in particular, there were significant declines compared with the second quarter of 2019: In the US, the volume of flotations shrank by 45 per cent to $15.1 billion and the number of IPOs fell by 38 per cent to 40 per cent.

In Europe, there was a decline in flotation volume of 55 per cent to $6.7 billion, while the number of stock market flotations dropped by 60 per cent to 22 per cent. 

In contrast, the Chinese market bucked the global trend. In China (including Hong Kong), the flotation volume rose by 55 per cent to $17.9 billion. The number of IPOs increased by 28 per cent to 91. The performance of Hong Kong highlights how that jurisdiction remains a key financial hub, even amidst worries about how mainland China is squeezing its legal autonomy with a new security law. EY said that the launch of China’s new STAR Market (in Shanghai) last July, and a number of big IPOs in Hong Kong from US foreign portfolio investors, helped propel the figures.

“On account of the worldwide measures to contain the coronavirus, IPO activities declined in April and May, as anticipated,” Tobias Meyer, head of transaction accounting and IPO services at EY in Switzerland, said. “We did, however, identify clear signs of recovery in June already.”