00:00How much sleep have you gotten this year? How busy have you and your team been?
00:04Yeah, it's a crazy year. I mean, like, especially in Hong Kong market, the IPO market, it's number one ranked globally.
00:12So think about how many stuff we have. And not only IPOs, the follow-ons this year alone is more than last three years combined.
00:20And then converts, it sets a record year for Hong Kong Star Exchange.
00:23So every product in the equity capital markets has been booming this year and a crazy year for the whole teams and the street.
00:31Does it continue then into 2026?
00:35The momentum is not showing any signs of stopping.
00:37Usually as we go towards the end of the year, things were stopped a little lower, slower down a little bit.
00:42But then if you look at last week, we also priced that 1.5 billion Hong Chao placement, and that was very well welcomed by the investors as well.
00:51And then moving to 2026, you see already more than 300 companies publicly filed for its Hong Kong IPOs.
00:59Just to give you a comparison, this year there were 85 companies priced, and then 300 companies on the pipeline.
01:06And then we have a lot of companies already in the preparation phase for their January accelerated product offerings as well.
01:12Okay, what type of conversations are you having currently with the ones, and you don't have to go into details because this is confidential anyway, about to hit the market.
01:20But do people have concerns over valuation?
01:24Are you still confident you can price things at the top end at the range and still have a good day the first day?
01:29What is that like recently?
01:30It also depends on how you set the range.
01:32Yes, well, that's part of your job too, right?
01:34Yeah, it's part of our job.
01:36But then for sure, the market sentiment and momentum is there.
01:38And if you look at the valuation for the region, it's still not high compared with historical levels for MSCI China.
01:45And if you compare MSCI China with the global, the world index, it's still at a discount.
01:51So the valuation by itself is not very high per se.
01:54And also, I think the foreign investor positioning is still light relative to what we see in 2020 and 2021.
02:00So I think so long as we price the things sensibly, the good aftermarket and everything will continue.
02:08What's the pipeline, though?
02:09Because a lot of it has been sort of A to H deals, some also coming back from the U.S.
02:16So what's the breakdown going to look like?
02:19No, exactly.
02:19I think for this year, it was dominated by A to H, U.S. back to Hong Kong, spinoffs, right?
02:25So these are all things on the back of existing listed companies.
02:28For really brand new company listings, there are not so many.
02:32There are only three companies, more than 500 bucks, that are brand new listings in Hong Kong.
02:36But then moving into next year, we do expect to see pickup activities in that.
02:41Of course, we will see continuous homecoming, A to H, spinoffs.
02:45But then for the brand new IPOs, especially the sizable ones, we do see a lot of them in the pipeline already.
02:50So it's going to be even more diversified and balanced into 2026.
02:54In what specific sectors do you think will get the brand new ones next year?
02:59I think the TMT, consumer and industrials are the important themes for this year.
03:07That's going to continue and including for the brand new ones out of these sectors.
03:11What's sort of the conversation like with companies?
03:18Because there's some, for instance, we're hearing, I mean, Pony AI and WeRide, it was very competitive.
03:23They ended up listing on the same day.
03:24There's ZAI, Minimax that both want to list.
03:27And again, there's a bit of a race.
03:29What's the sort of pressure and the conversations like with some of these companies, particularly in the tech space?
03:34Yeah, I think for a lot of these companies, so long as they get the right approvals in process in place,
03:42they just want to get the process rolling and get things done as soon as possible.
03:46They don't have to be worried about the demand and investor interest.
03:50So there is no particular reason for them to wait as well.
03:53So I think it's just that everyone is trying to grab the market window whenever it is there.
03:59Speaking of, let me just borrow that last thing you mentioned, grab this window of opportunity.
04:03Yourself and many of your peers, of course, have had tremendous business.
04:08What's the outlook for fees?
04:10We've seen a lot of pressure on that recently.
04:12You mean in terms of fee percentage or in?
04:16That's open-ended, yeah.
04:17What's the outlook in terms of the commercial side for the banks here?
04:23Because there's a lot of activity, but there's been a lot of competition too.
04:26It's a lot of competition, a lot of activity.
04:28But I think that for sure that the large volumes helps on the fee general.
04:34When it comes to the fee rate, yes.
04:36I think for some of the product types, it's a lower rate in general for the A to H or homecoming, for example.
04:46But technically, these are also listings for already listed companies.
04:50But then I think that for the more normal, like new listings, the normal full-ons and converts, I think the rate is at the normal level versus the historical.
05:00That's good context.
05:01Yeah, so I think I'm sure that the street is having a better year for this year, for sure, much better versus the last year.
05:09People are probably counting your bonuses already ahead of the March announcement.
05:12But we can talk about that.
05:13I feel like bonus conversations can go on all year.
05:17Someone's wondering too.
05:20Then I guess going back to that around the fees, do you think that you're going to see even better numbers than next year if you do have more of those original listings as opposed to A to H?
05:30Yes.
05:30I think on the back of more listings and more like new listings and also continue with strong momentum for follow-ons and converts, I hope that next year is going to be an even better year than this year.
05:41At least the momentum is not stopping yet.
05:43Right.
05:44What's your outlook from your conversations underground with clients, the outlook for the A-share market?
05:52The A-share market.
05:52The A-share market in listings there because we've seen, to your point, A to H.
05:55But in the A-share market, people seem to have ignored the market for now.
05:59Well, I think for the A-share listings, it's also driven by regulatory approvals, et cetera, right?
06:06And then I think if you look at the secondary market, actually people have not ignored that market as well.
06:11There are continued foreign inflows into the A-share market.
06:14And actually, as a house view, we value both A-share and Hong Kong stocks equally going into next year.
06:21Of course, this year we see that there is a meaningful diminishing of the gap between A to H.
06:26I think this is on the back of a lot of foreign attentions back into China, Hong Kong, and then the valuation gap for A to H has been, beginning of the year, has been quite big.
06:34So it has been narrowing.
06:35But then into 2026, we do see that investors continue to be focused on the region that includes both A and H.
06:42But that said, of course, a lot of the quality companies in A will continue to come to H.
06:47And for those already had the H listing, they will probably do their full-on issuance or converse in the Hong Kong line, like what SF did this year.
06:56Yeah, Shunfeng did that too.
06:57Yeah.
06:57What's the holdup then on some of the ones for the mainland?
07:01Because I think Unitree, for instance, is a name that stands out.
07:04That's one of the most promising humanoid robotics companies.
07:07And there's a lot of investor interest in this one as well.
07:10You've even got a report out from Citi saying that humanoid robots will see exponential growth in the next 12 months.
07:15But how come there's sort of delay?
07:17Because this is a listing we've been talking about for several months now.
07:20Yeah, I think it's probably market has so much of an expectation and attentions.
07:26They are going through their own process, just like there are companies in Hong Kong that are going through their own process as well.
07:32So let's continue to monitor and see when it comes out.
07:36Before I ask you about the rest of the region, just what's the risk to all this momentum in Hong Kong next year?
07:44People keep talking about, obviously, that there are a lot of bullish reasons to remain bullish.
07:47But is there a risk, in your view, that you think we should be cognizant of?
07:51Yeah, because I think a lot of favorable factors this year, including the geopolitical outcome, was better than we originally feared.
08:01There is advancement in innovation, accommodative policies, I think, both monetary and fiscal.
08:07These are all supportive factors.
08:09But these factors, are they going to lift up the valuation to the same extent next year as this year?
08:14Probably not.
08:15So I think a lot of the stock performance is going to be driven also by the earnings and growth, the fundamentals of the companies in the region on the back of the supportive physical policies and the monetary policies, et cetera.
08:27The liquidity conditions too, right?
08:29Yeah, exactly.
08:29We just came from Singapore last week.
08:32And the only reason I bring that up is we were speaking with the SGX CEO last week.
08:37And they've also had a decent year, relatively speaking, of course, to the past few years.
08:42What's your outlook for the rest of the region outside of Hong Kong?
08:45Is there a market that stands out to you?
08:47Yeah, I think, firstly, Hong Kong is going to be the continue driver of the region.
08:51Okay.
08:52And then India…
08:52Still dominant, you think, next year by looking at the pipeline?
08:55Still the main driver, yeah.
08:56India is going to remain active.
08:58They have a long list of the IPO backlog as well.
09:00And they have been doing well last year and this year as well.
09:04I think career market probably will see increased activity on the back of the corporate reforms as well as their exposure to the AI-related CapEx cycle.
09:16And also, Taiwan, we are going to see a high start in January because they have announced a bunch of tech-related CBS as well.
09:22Yeah.
09:23So, I think quite a few of the regions in the broader APEC region is going to continue to see meaningful activities into next year.
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