2020 Q1 Review and Outlook for Chinese Mainland and HK IPO Markets

National Public Offering Group

In this report, it is said that the Chinese Mainland and Hong Kong IPO markets continued to thrive in Q1 2020 despite the coronavirus disease 2019 (COVID-19) pandemic. Shanghai Stock Exchange soared to 1st place in IPO funds raised, surpassing both main exchanges in the US. Hong Kong Stock Exchange took 5th place.

Even though major business and manufacturing operations across China were suspended from late January to early March, reform of the STAR Market in Shanghai and ChiNext in Shenzhen boosted A-share IPO activity. At the same time, despite a tumbling market due to uncertainties around the COVID-19 outbreak and outlook for key economies, Hong Kong's new listings were 1st among all stock exchanges in Q1 2020. In the US, more Chinese life science and pharmaceutical companies floated shares this Q1. However, there were no new listings in March 2020 as US markets hit circuit breakers.

The report says IPO activity could go in two possible directions in 2020. On one hand, developments in the pandemic and its full impact on the global economy remain unknown, which could postpone the listing timetables of IPO companies. On the other hand, quantitative easing, economic stimulus and relief measures introduced by different countries to confront challenges from the COVID-19 outbreak could stimulate the global capital market dramatically once the pandemic is dispelled. Hence, IPO activity could swiftly become even more active.

But, in the longer run, major reforms to the Chinese Mainland and Hong Kong listing regimes are set to make both capital markets more attractive for potential IPO candidates.

In the Chinese Mainland, Deloitte forecasts 140-170 new listings raising RMB180 billion-220 billion on the Main Board, SME Board and ChiNext by the end of 2020. The STAR Market is expected to record 120-150 IPOs raising RMB130 billion-160 billion.

As for Hong Kong, the report predicts it will have about 160 IPOs raising HKD160 billion-HKD250 billion for the full year. New listings from life science, pharmaceutical, biotech and TMT companies are to continue to be the market spotlights.

(Simplified Chinese version only)

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