A-share IPO market expected to remain active in the second half of 2023

Beijing, 8 June 2023 – PwC has today released its review of the performance of the IPO markets in Mainland China and Hong Kong in the first half of 2023 and their future prospects. Over this period, the number of A-share IPOs slowed, with 160 IPOs predicted by the end of June – a 5% drop year-on-year. Total funds raised are forecast to be over RMB 190 billion – a 38% drop year-on-year.

While A-share IPOs and financing decreased year-on-year, the Shanghai and Shenzhen Stock Exchanges still rank first and second in the world respectively in terms of fundraising. It is estimated that, by the end of June, about 60 IPOs will have been issued on each of these two exchanges. Total fundraising will be over RMB 100 billion in Shanghai and close to RMB 80 billion in Shenzhen.

Thomas Leung, PwC China Markets Managing partner, said:“The registration-based IPO system has broadened listings on the main board. The efficiency of IPO review and issuance have improved. The multi-level nature of Mainland China’s capital markets has also become clearer. With gradual economic recovery, government policies for steady growth, A-share IPOs will remain active in the second half of 2023. PwC predicts 280-330 A-share IPOs for the full year and fundraising of RMB 450-500 billion. Mainland China’s A-share markets will continue to rank first in the world.”

The Beijing Stock Exchange and the Shenzhen ChiNext account for more than 40 new listings each, or half of all A-share IPOs in the first half. The STAR market and the Shenzhen ChiNext come first and second in terms of fundraising, with nearly RMB 70 billion and RMB 55 billion respectively - representing over 60% of total A-share funds. Five of the top ten A-share IPOs in the first half of 2023 were listed on the STAR market.

Jean Sun, PwC China Firmwide Corporate Services partner, said: “Implementation of the registration-based IPO system in February will increase the share of direct financing in China’s capital markets and thus overall economic development. Since the implementation, the audit quality of A-share listed companies has improved and the path for companies seeking a listing has become smoother. At the same time, companies with poor performance, higher operational risks and unsound governance are being delisted more quickly. An honest market that protects investors is the cornerstone of the registration system.”

IPO fundraising continued to slow in Hong Kong in the first half of 2023 due to global economic uncertainty and other unfavourable factors. It is estimated that there will be 30 IPOs in the Hong Kong market over the period, raising HK$17 billion in total – a 11% increase in volume and a 14% decrease in financing year-on-year. The main sectors will be industrial and materials, retail, consumer goods and services.

The Hong Kong government has introduced a range of policies to promote the growth of the tech industry. Coupled with the new regime for ‘Specialist Technology Companies’ under ’Chapter 18C’, more tech companies will be attracted to list in Hong Kong, thus increasing investor confidence in the capital market. PwC predicts that new economy businesses, including biotechnology and other Specialist Technology Companies, will continue to be active in the Hong Kong IPO market in the second half of 2023.

Looking forward, the Mainland China and Hong Kong governments will further strengthen connectivity between their capital markets – providing more opportunities for businesses and investors, while promoting Hong Kong’s economic recovery. Meanwhile, as the trajectory of interest rates becomes clearer, the capital markets will be a more stable environment for IPOs and will help Hong Kong consolidate its status as an international financial centre. PwC forecasts that about 100 companies will list in Hong Kong in 2023, and the total IPO fundraising amount for the year will be between HK$150 and 170 billion.