Beijing, 4 January 2021 – PwC has released data reviewing the IPO market in 2020. A-share IPOs were not affected by COVID-19 and maintained a strong momentum. IPO volume and fundraising increased significantly compared to the previous year. There were 395 new listings and RMB471.9 billion in total funds raised, an increase of 97% and 86% respectively on the previous year.
The implementation of the registration system has accelerated the flow of A-share IPOs – the number of IPOs issued through registration has exceeded those issued through the audit system. In 2020, there were 145 IPOs on the STAR market and 107 on the Shenzhen ChiNext, both outstripping the main board of Shanghai (89 IPOs). The STAR Market, which has been in place for about one and a half years, has developed rapidly. In 2020 it raised RMB 222.6 billion, ranking first among all boards in A-share market, while the combined fundraising of the main board, Shenzhen SME Board and Shenzhen ChiNext totalled RMB 249.3 billion. Of the top ten IPO fundraisings in 2020, the STAR Market accounted for seven. It has become the most popular board in the A-share market.
“Although COVID-19 has had an impact on the global economy, the rapid and stable recovery of China’s domestic economy and the success of the phased registration system reform means that A-share listings have been unaffected. Instead they show a positive and active trend. Looking forward to 2021, we will see the new pattern of ‘dual circulation’ and the strategic opportunity of the 14th Five Year Plan. These supporting factors are favourable to capital markets. Along with the full implementation of the registration system, A-share IPOs will maintain good momentum. We expect A-share IPOs to reach a ten-year high, with 430-490 IPOs and total fundraising reaching RMB 450-480 billion in 2021,” said Thomas Leung, PwC China Markets Leader.
From an industry perspective, Shanghai main board IPOs are dominated by industrial products, consumer goods and services, while STAR Market IPOs were mainly from information technology, telecommunications and industrial products. Shenzhen SME Board and ChiNext IPOs were mainly from industrial products. Looking at individual stocks, the top ten IPOs raised RMB 141.7 billion, accounting for 30% of total fundraising in 2020. Semiconductor Manufacturing International Corporation took the lead with RMB 53.2 billion in fundraising.
“2020 marked the 30th anniversary of China’s capital markets. From the reform of non-tradable shares to the present registration system, the pace of China’s market reform is constantly accelerating. A multi-tier capital market is being established in China, which will provide more financing platforms for all types of enterprises. 2020 also represented a new starting point for the internationalization of China’s capital markets, which need to prevent major financing risks while implementing investment reform and deepening internationalization. In 2021, the registration system is likely to be fully integrated into the main and SME boards. The introduction of new delisting rules will also help A-shares build an ecosystem that ensures survival of the fittest. This will improve the quality of listed companies and speed up efficient market resource allocation,” said Jean Sun, PwC China Firmwide Corporate Services partner.
Although the environment for Sino-US relations is complex, many Chinese enterprises still choose to go public in the United States. In 2020, 31 companies went to US capital markets. Total fundraising was US$12.1 billion, four times that of the previous year. Among them, new energy vehicles, financial technology, Internet services and other industries were particularly favoured by U.S. investors, with each IPO raising more than US$1 billion.
Despite adverse external factors, Hong Kong’s IPO market had an amazing year, ranking second among global IPO markets in terms of total funds raised. There were 154 new listings in 2020, of which 146 were Main Board listings. These mostly comprised retail, consumer goods & services companies and industrials, for which the number of listings decreased by 16% compared to 2019. The number of GEM Board new listings in 2020 also decreased compared to 2019. Eight companies were listed on the GEM Board in 2020, a decrease of 47% year-on-year. Additionally, there were two companies listed by introduction on the Main Board and eight GEM Board listed companies switched to the Main Board without raising any funds.
Total funds raised by IPOs in 2020 reached HK$397.7 billion, marking an increase of 25% from the previous year. New economy businesses and secondary listings by US-listed Chinese businesses led to a stronger performance for the Main Board, which recorded HK$397.1 billion of total fundraising – an increase of 26%. Funds raised on the GEM Board stood at HK$0.6 billion – a 40% decrease.
More biotech company listings were seen in Hong Kong in 2020 than in 2019. This trend is expected to continue in 2021, it will gradually make Hong Kong the best listing platform for biotech companies in Asia. New economy and US-listed Chinese enterprises are expected to remain the main drivers for listings in 2021 on HKEX, due to successful listing regulations reform. PwC predicts 170 IPOs in 2021, with an estimated total HK$420 to 460 billion raised. This could set a new record high for Hong Kong, and it’s expected to regain the top global IPO fundraising position in 2021. The proposed expanded Stock Connect scheme will allow Hong Kong to offer more unique value and business opportunities for enterprises and investors.