Hong Kong is mired in recession, but its IPO market is the strongest since 2015 among everyday investors

• Hong Kong's initial public offering market is the most popular among everyday investors in four years despite antigovernment demonstrations and an economic recession, Bloomberg reported Wednesday.
• The region's median retail subscription ratio hit 13 times for IPOs since October, according to Bloomberg. The figure measures investor interest in stock offerings, and the latest reading is the highest since the second quarter of 2015.
• Alibaba's colossal $12.9 billion offering in November helped cement the city as an "unassailable" financial hub, Credit Suisse Asia Pacific Chief Investment Officer John Woods told Bloomberg.
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Hong Kong initial public offerings are the most popular with everyday investors in four years despite prolonged antigovernment protests and an economic recession, Bloomberg reported Wednesday.

The region's median retail subscription ratio hit 13 times for IPOs since the beginning of October, the highest since the second quarter of 2015, according to Bloomberg data. Investors could be enticed by cheap prices, as the city's Hang Seng index is up only 0.8% in the year-to-date. The S&P 500 index is up 23% in the same period, Germany's DAX is up 24%, and Japan's Nikkei 225 is up 16%.

An IPOs subscription ratio sets a rough discount for shareholders ahead of a new listing. Most new offerings are preceded by a rights offering, where existing shareholders can purchase more stock at a discount to the market price. The ratio notes how many shares an investor must already hold to effectively receive a free share. Ratios are higher for hotter listings, as demand for shares pushes the discount lower.

The listings' popularity arrives as Hong Kong's third-quarter GDP reading plunged the semi-autonomous region into its first recession in a decade. Hong Kong's economy contracted 3.2% in the July-to-September quarter as protests roiled the city's tourism, restaurant, and retail industries. The city's GDP fell 0.5% in the second quarter of 2019. An economy enters recession after two consecutive quarters of GDP decline.

Hong Kong's offering market is in the midst of an end-of-year surge and set to raise more through IPOs than in 2018. Firms have already raised $36.6 billion through first-time offerings this year, according to Bloomberg, $200 million short of last year's figure. The city's IPO market saw a massive windfall from Alibaba Group's $12.9 billion sale in November, a record sum for a dual listing.

The Alibaba sale supports Hong Kong's position as an "unassailable" financial hub, Credit Suisse Asia Pacific Chief Investment Officer John Woods told Bloomberg. Investors' appetite for the colossal offering helped the region's exchange catch up to other major offering outlets, and the latest subscription ratio data signals retail investors are hungry for more.

"That's a pretty powerful statement and speaks to liquidity. There's nowhere else in Asia that has the level of liquidity that China needs," Woods said.

Antigovernment protests began in June over a proposed extradition law that would allow Hong Kong residents to be tried in mainland China. While the bill was pulled in September, demonstrations have continued.

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