1H 2020 Review and Outlook for Chinese Mainland and HK IPO Markets
National Public Offering Group
According to an analysis on the first half (1H) 2020 review and outlook for Chinese Mainland and Hong Kong initial public offering (IPO) markets by the National Public Offering Group of Deloitte China, the Chinese Mainland and Hong Kong IPO markets are set to have remained strong amid the COVID-19 pandemic in 1H 2020. Helped by a large number of tech listings on the SSE STAR Market, Shanghai Stock Exchange sustained its global leadership in IPO funds raised, surpassing New York Stock Exchange and Nasdaq once again. Hong Kong Stock Exchange rose to 3rd place following the mega secondary listings of two US-listed Chinese tech firms. However, IPO activity among Chinese companies in the US remains subdued by the pandemic, intense Sino-US relations and policy headwinds.
Regulatory reforms, the resilience of tech businesses and abundant market liquidity flowing into Greater China are set to prompt more new economy listings in 2H, prompting the Chinese Mainland and Hong Kong to be regarded as key listing venues for new economy companies. The reforms and market developments include.
- Proposed changes to the listing regime for foreign businesses in the US;
- Incorporation of weighted-voting rights (WVR) and secondary listed companies into Hong Kong Hang Seng Indices;
- Shortening the period from offering to pricing in Hong Kong;
- Registration-based regime for Shenzhen's ChiNext;
- Enhanced Mainland listing rules for red chips;
- Transfer listings to ChiNext or the STAR Market for 'selection tier' issuers on the National Equities Exchange and Quotations;
- Partnership between Hong Kong Exchanges & Clearing and MSCI on launch of a suite of Asia and Emerging market equity index futures and options; and
- Potential introduction of corporate WVR beneficiaries in Hong Kong.
Against this backdrop, Deloitte anticipates the Chinese Mainland market will have 100-120 new listings on the STAR Market raising RMB110 billion to RMB130 billion, and a further 130-160 IPOs raising RMB170 billion to RMB220 billion across the Main Board, SME Board and ChiNext, for the full year.
As for Hong Kong, Deloitte forecasts it will have had about 130 new listings raising HKD160 billion-HKD220 billion over the course of 2020, including at least a handful of secondary listings by US-listed Chinese tech businesses. Overall, life sciences, healthcare, biotech and TMT listings are set to shine.