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Agricultural Development Bank of China
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China's Shanghai and Hong Kong likely among top 3 in global IPO fund raising Q1-3, Deloitte report

September 24, 2020


Abstract : The exchanges in Shanghai, Hong Kong and Shenzhen are likely to rank the first, the third and the fifth in global ranking for IPO fund raising during the first three quarters this year, Deloitte China said in an analysis report released Wednesday in Hong Kong.

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HONG KONG, Sept. 24 (Xinhua) -- The exchanges in Shanghai, Hong Kong and Shenzhen are likely to rank the first, the third and the fifth in global ranking for IPO fund raising during the first three quarters this year, Deloitte China said in an analysis report released Wednesday in Hong Kong.

Deloitte said that major listings in Chinese ainland and Hong Kong in 2020 include the return of Hong Kong-listed companies to the Shanghai Stock Exchange (SSE) Science and Technology Innovation Board (the STAR Board), the second listing of U.S.-listed Chinese firms in Hong Kong, and the the registration-based initial public offerings (IPOs) of enterprises on the ChiNext board at Shenzhen Stock Exchange.


Reform-boosted vitality

Based on the current SSE achievements, the Deloitte report expects that after Ant Group goes public, which is expected to be the world's largest IPO in 2020, the SSE will remain at the top of the global IPO rankings. 

China's capital market has undergone many major reforms in recent years, said Wu Xiaohui, Deloitte's National A-Share Market Lead Partner, noting that it is challenging for any capital markets to carry out such significant reform moves, especially under the circumstances of the epidemic since the first quarter. With that said, the investors are very happy to witness the fruitful results brought about by continuous reform in such a short period of time, Wu noted.

The Deloitte report expects that there will be 140-170 new shares going listed on STAR Board, raising 320 billion yuan to even 400 billion yuan; there will be about 120-150 IPOs on the ChiNext board, with the amount of funds raised likely reaching 100-130 billion yuan; the main board and the SME board are expected to have 120 to 150 new shares, raising 130 to 160 billion yuan.

Wu said that after the implementation of the registration-based system, more new shares will be listed on the SSE STAR Board and ChiNext board. Therefore, the amount of funds raised in the Chinese mainland market is very likely to break the 2010 record.


Hong Kong a new center for IPO funds

The Deloitte report believes that China's rapid control of the Covid-19 epidemic has made the market optimistic about China's economic development. At the same time, Hong Kong launched a new private fund limited liability partnership system, exchange traded funds (ETFs) between Hong Kong and the Chinese mainland realized mutual linkage for the first time, the Guangdong-Hong Kong-Macao Greater Bay Area launched a cross-border wealth management business pilot, the Hang Seng Tech Index was launched. These new measures have boosted the development of the Hong Kong IPO market.

Ou Zhenxing, the managing partner of Deloitte China southern region, said that in the context of geopolitical tensions, the second listing mechanism in Hong Kong is at the right time to diversify the funding channels for China Concept Stocks. The popularity of these new shares and the large amount of funds raised reflect that despite the challenging market environment, the Hong Kong capital market still has a strong ability to attract liquidity.

Deloitte China predicts that in the fourth quarter of 2020, Hong Kong will welcome two to three second-listed companies in addition to two to three very large IPOs. It is expected that Hong Kong will usher in about 140 new stock listings in 2020, and the amount of funds raised will reach 400 billion Hong Kong dollars.

Whether Hong Kong's fund-raising level in 2020 can surpass history will depend on the issuance ratio, valuation and pricing of Ant Group's listing in Hong Kong and Shanghai, said Ji Wenhe, the managing partner of Deloitte China's national public offering group. In addition, the performance of the Hong Kong IPO market this year will help Hong Kong form a stronger financing ecosystem and stimulate new economy companies to list in Hong Kong in the next few years. (Contributed by Li Binbin, edited by Niu Huizhe with Xinhua Silk Road, niuhuizhe@xinhua.org)

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Keyword: ChiNext board STAR Board

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