The IPO markets in China and Hong Kong to become more robust in 2H 2023, said Deloitte China's Capital Market Services Group (CMSG) recently.
According to CMSG’s 1H 2023 analysis and forecasts for the performance of Chinese Mainland and Hong Kong IPO market, the Shanghai Stock Exchange and Shenzhen Stock Exchange will have been the world's largest and 2nd largest listing destinations by funds raised in 1H 2023.
Shanghai hosted three of the world's 10 biggest IPOs while Shenzhen recorded one during the period, with the four IPOs coming from the semiconductor or energy and resources sectors, CMSG observed.
New York Stock Exchange will have taken 3rd place with the world's largest IPO, which was from a consumer healthcare company, CMSG said.
Abu Dhabi Securities Exchange and Nasdaq will have taken 4th and 5th place respectively and the Stock Exchange of Hong Kong will have ranked 6th, the group added.
Forecast highlights: IPO markets in China and Hong Kong
- The CMSG expects IPO activity in the Chinese Mainland to become more vibrant in 2H 2023 following full implementation of the registration-based regime.
- The market is expected to record more IPO funds raised in the whole of 2023 than it did in 2022, a record year, boosted by a continuous revival in economic and business activities, Government policies and measures to stabiliae growth, and the normal issuance of IPOs.
- Numerous enhancements to Stock Connect, including its addition of HK-listed overseas companies, more spin-offs from technology companies, the return of China concept stocks, and the launch of the Specialist Technology Company listing rules are to set help the Hong Kong IPO market rebound in around Q4 2023, following an expectation that US interest rate hikes might peak in Q3 2023.
- The timing of the US Fed indicating that it will end interest rate hikes, developments in the global banking sector, and China’s economic recovery resulting from economic stimulus measures over the remainder of the year will affect volatility and liquidity, particularly sentiment and capital flow towards stocks, a potential pickup in stock valuations, and ultimately the listing windows for companies' Hong Kong IPOs.
- The CMSG expects the A share market will have had 174 new listings raising RMB209.5 billion in 1H 2023 against 169 IPOs raising RMB311.9 billion in 1H 2022.
- This would represent a 3% rise in the number of IPOs and a 33% drop in funds raised.
- Shanghai Stock Exchange is forecast to have had 62 IPOs raising RMB114.4 billion, followed by Shenzhen Stock Exchange with 70 IPOs raising RMB87.2 billion, and Beijing Stock Exchange with 42 IPOs raising RMB7.9 billion.
- ChiNext is expected to have maintained its lead in IPO volume, whereas the SSE STAR Market is forecast to have raised the most funds.
- Beijing Stock Exchange and the Shanghai and Shenzhen main boards have seen a rise in activity, hosting more IPOs.
- Hong Kong is expected to have had 31 IPOs raising HKD17.8 billion in 1H 2023, versus 24 IPOs raising HKD17.7 billion in 1H 2022. This would represent a 29% rise in deal volume and a 1% increase in deal value. Hong Kong hosted only one large offering and one return listing of a China concept stock in 1H 2023.
- For this full year, the CMSG forecasts that Hong Kong will record nearly 100 new listings raising around HKD180 billion. This will be driven by enhancements to Stock Connect, spin-offs of technology companies, listings of China concept stocks, the new listing regime for Specialist Technology Companies, and listings from international companies.