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December 28, 2017

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IPOs in China markets touch 10-year high

THE number of initial public offerings on the yuan-denominated A-share market and the Hong Kong exchange hit a 10-year high in 2017, a latest report showed.

This year will close with more IPO listings than any year since 2007, driven by lower market volatility across regions, high-valuation levels and a renewed appetite for cross-border IPOs, an EY report said yesterday.

The Shenzhen Stock Exchange topped with 222 IPOs, followed by 214 IPOs in Shanghai, giving a total of 436 on the Chinese mainland. The Hong Kong exchange was third globally with 160 IPOs launched.

“The year 2017 has registered 1,624 IPOs with US$188.8 billion raised, indicating a year-on-year increase of 49 percent by the number of deals and 40 percent by capital raised,” said Lawrence Lau, EY assurance partner.

“Although these figures do not reach the level of 2007 (1,974 IPOs with US$338.4 billion of funds raised), investors are anticipating that as markets return to the pre-crisis level. IPO activities will rise with more mega deals, increasing the global proceeds in 2018.”

The 436 IPOs in the A-share market in 2017 raised a total of 230.4 billion yuan (US$35 billion), up 92 percent by volume and 53 percent by proceeds compared with last year.

“Driven by SMEs, IPOs in the A-share market reached over 400 by annual deal number for the first time, exceeding the previous record of 347 IPOs in 2010, hitting a record high,” said Wang Yang, EY assurance partner.

“However, funds raised were only 47 percent of that in 2010, mainly due to the absence of large individual IPOs of over 5 billion yuan, while the SMEs dominated the IPO market with individual proceeds of less than 1 billion yuan,” Wang said.

IPOs in the A-share market included 18 companies which exited the National Equities Exchange and Quotations this year and successfully launched IPOs, raising a total of 6.96 billion yuan.

By sectors, industrial enterprises continued to rank first in IPO number and funds raised, with 137 IPOs netting 63.9 billion yuan in total, followed by the TMT (technology, media and telecom) sector, consumer products, retail, materials and health care industries.

EY expects A-share listings in industrials, TMT and materials to be the top three industries in the IPO pipeline in 2018, and forecasts more IPOs from the health care industry.


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