China tops global IPO ranking in first half as issuers leverage capital market reforms, AI frenzy
- China became a global IPO hotspot with a combined US$31.3 billion raised on the Shanghai, Shenzhen and Beijing exchanges in the six months to June
- The Chinese IPO market was rejuvenated after capital market reforms made it easier for companies to sell new shares
China was the world’s most active market for initial public offerings (IPOs) in the first half of the year, accounting for almost half of global fundraising, as Beijing unleashed capital market reforms which made it easier for companies to sell new shares.
Chinese companies raised a combined US$31.3 billion from IPO flotations on the Shanghai, Shenzhen and Beijing exchanges in the six months to June, in a global total of US$67.9 billion, Bloomberg data showed.
While trading in China’s stock markets has largely been sluggish this year due to a faltering growth outlook, investors were more welcoming to companies raising funds, in particular those from the recently popular artificial intelligence (AI) sector.
In February, Beijing overhauled its IPO regulations requiring exchanges to implement stricter information disclosure standards while also removing administrative caps on prices of new shares to be sold to the public.
“The launch of the new registration system has left the door open for more high-quality offerings on China’s capital market,” said Lin Jin, an analyst at Shenwan Hongyuan Group in Shanghai. “That is an effective push for connecting the real economy with the capital market.”
Mainland China’s three stock exchanges handled 172 IPOs in the first six months of the year, compared with 166 in the same period last year, Bloomberg data showed. By sector, industrials led with an aggregate 74.8 billion yuan (US$10.3 billion) of fundraising, followed by technology companies which raised 51.8 billion yuan as China ramped up its tech self-reliance campaign as US export sanctions loomed.
Syngenta’s US$9 billion IPO approved by Shanghai Stock Exchange
The Shanghai exchange hosted mainland China’s three biggest offerings made during the period. Nexchip Semiconductor, a maker of 12-inch wafers in the eastern Anhui province, was the top fund raiser at 11.5 billion yuan. Semiconductor Manufacturing Electronics, a Zhejiang province-based wafer foundry, ranked second with its 11.1 billion yuan IPO followed by the 7.2 billion-yuan sale by power generator Shaanxi Energy Investment.
Still, the combined value of IPOs dropped 35 per cent from the same period last year, as the year ago tally was boosted by two jumbo offerings – China Mobile’s 56 billion yuan sale and CNOOC’s 32 billion yuan flotation.
The global IPO market was dented in the first half as the US Federal Reserve embarked on its fastest monetary policy tightening cycle since the 1980s even as concerns about an economic recession hurt demand. The aggregate funds raised fell 28 per cent from the same period a year ago.
China is seen cementing its global lead in the IPO market, with Swiss agrichemical giant Syngenta Group expected to launch its 65 billion yuan sale. That offering is on track to be the world’s biggest IPO this year, eclipsing the US$4.4 billion deal by US consumer health company Kenvue.
CSC Financial, the Beijing-based brokerage backed by the local government and China Investment Corp, topped the ranking of underwriters in the first half, after it handled 17 IPOs that raised 35.2 billion yuan, according to Bloomberg data. Citic Securities, the nation’s biggest listed brokerage, and China International Capital Corp, occupied the second and third place, arranging deals worth 28.1 billion yuan and 23.3 billion yuan, respectively.
