China

Chinese Companies Raise the Most From IPOs This Year

The Hong Kong Exchanges flag is seen alongside those of China and Hong Kong outside Hong Kong Stock Exchange. Listings in China topped those in the US and Europe this year despite being down from last year because of the economic slowdown. File photo by Bobby Yip, Reuters.

Chinese companies raised more than any other country’s firms through initial public offerings (IPOs) in the domestic and overseas markets this year.

Chinese firms raised $71.2 billion, putting them far ahead of $17.3 billion by US companies, and Europe’s $16.4 billion, according to Refinitiv data.

China’s IPOs had still seen a decline from $98.48 billion raised in the same period last year.

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The increase in mainland IPOs comes as companies and dealmakers await final rules from the China Securities Regulatory Commission and Cyberspace Administration of China that will govern overseas listings, especially for firms that handle data.

“China’s domestic market is less impacted by global volatilities. Internally, China has a lower inflation environment and loosening monetary policy, equity market valuation is more resilient,” said Mandy Zhu, head of China Global Banking at UBS.

While global central banks are grappling with a surge in inflation, price pressures are rather benign in China, with interest rates there being cut.

China’s IPO Leaders

Shanghai United Imaging Healthcare led China’s IPO issuance this year, raising $1.63 billion, followed by Hygon Information Technology and Jiangxi Jinko PV Material, raising $1.6 billion and $1.58 billion, respectively.

While a surge in volatility has prompted global investors to exit riskier equity markets in the last few months, Chinese markets have been relatively resilient.

According to Refinitiv Lipper, global equity funds witnessed outflows of $144 billion since April, while Chinese equity funds received inflows worth $21.3 billion.

Overseas List Drop

However, Chinese companies’ listings overseas have dropped sharply this year.

The data showed that IPO issuances on the mainland fell just 11%, while Chinese listings in US and Europe slumped 97% and 81%, respectively.

Analysts said the declines in overseas listings are due to concerns over China’s Covid-19 lockdowns, growth worries, ongoing audit disputes with the United States, and uncertainties over offshore listing rules.

“We expect international issuance volume to recover, too, led by valuation re-rating in secondary markets. Hong Kong has accumulated a strong IPO pipeline, which will see a surge of issuance when the market recovers to a supportive level,” Zhu at UBS said.

She added that a recovery in the US market listings will take a longer time, given the uncertainty over US-China relations.