The amount of money deposited in Hong Kong’s banking system jumped in the first half as investors targeted a series of hotly anticipated initial public offerings in the city, with the sector also benefiting from the economic recovery.
Deposits in the local currency stood at HK$7.87 trillion (US$1.01 trillion) at the end of June, 11.5 per cent higher compared to HK$7.06 trillion in the year-earlier period, data from the Hong Kong Monetary Authority (HKMA) showed on Friday.
Together with foreign currency deposits, the amount held in bank accounts rose by 7.9 per cent year on year in the first half to HK$15.18 trillion.
The strong growth in deposits was “caused by fund flows associated with large-scale IPO activities”, the HKMA said in an statement on Friday.
The increase in deposits in the first half followed a 5.4 per cent increase in total deposits last year as a whole, which was also driven by capital inflows chasing a slew of popular IPOs.
Hong Kong’s economic growth has been robust this year. The city’s second-quarter economic growth stood at 7.5 per cent, after a 7.9 per cent boost in the first quarter, which was the fastest pace in more than a decade. This comes after a difficult 2020 when the economy shrunk 6.1 per cent, the biggest contraction on record.
“The growth in deposits and fund inflows are likely to continue as we expect there will be more IPOs in the second half,” said Tom Chan Pak-lam, chairman of Institute of Securities Dealers, an industry body of local brokers. “Many technology companies may consider listing in Hong Kong instead of the US, following the mainland’s crackdown on Didi Chuxing.”
China’s top cybersecurity regulator on July 10 unveiled draft rules under which it would review any foreign listings by technology platform companies that possess the data of at least 1 million users. That followed an investigation into dominant ride-hailing operator Didi Chuxing days after its US$4.4 billion New York stock offering.
The heightened scrutiny of China’s tech giants has unnerved investors and caused a number of mainland and Hong Kong companies to pause their US listing plans or opt for Hong Kong to raise capital from investors. These include lifestyle platform Xiaohongshu or Little Red Book, vegetable-delivery firm Meicai and logistics start-up Lalamove.
Despite losing Didi to the New York Stock Exchange, Hong Kong was able to attract many popular IPOs. This includes Kuaishou Technology, the video-sharing platform, which raised over US$6 billion in February, followed by search engine Baidu and video-sharing platform Bilibili’s secondary listings in March that raised a combined US$5.68 billion.
A total of 47 companies raised a total of US$27.95 billion in the first half, a year on year increase of nearly 130 per cent, according to Refinitiv data.