2020 Review and 2021 Outlook for Chinese Mainland and HK IPO Markets

The National Public Offering Group of Deloitte China released its analysis and forecasts for the Chinese Mainland and Hong Kong initial public offering (IPO) markets in 2020 and 2021.

According to its research findings, Nasdaq will be 2020's leading IPO exchange, with Hong Kong Stock Exchange claiming 2nd place, followed by Shanghai Stock Exchange, based on the forecasted IPO proceeds that will have been raised by 31 December 2020. Shenzhen Stock Exchange is expected to take 5th place.

Driven by new economy listings and various reforms, in particular changes in US regulatory oversight over foreign issuers, the registration-based regime for ChiNext, the limited partnership fund regime in Hong Kong, and GBA Wealth Management Connect, Mainland and Hong Kong markets reached new heights in 2020.

Despite concerns about more stringent regulatory oversight of foreign company listings in the US, the US IPO market for Chinese companies is still set to have had more new listings and raised more funds in 2020. This indicates there will still be US financing opportunities for Chinese companies in some sectors.

These trends should continue in 2021, driven by two main factors. This first is the registration-based regime facilitating more new listings on the SSE STAR Market and ChiNext, and possibly being extended to the Main Board and SME Board. The second is more stringent oversight over foreign issuers in the US. This could prompt more Chinese concept stocks to pursue secondary offerings in Hong Kong, or consider Hong Kong or the Mainland as their priority listing destination.

The capacity of the Mainland IPO market is expected to expand further in 2021. Every market is expected to see more new listings and raise more funds. The SSE STAR Market is forecast to have about 150-180 IPOs raising about RMB250 billion-RMB300 billion; 140-170 companies could go public on ChiNext, raising RMB140 billion-170 billion; and the Main Board and SME Board are likely to have about 120-150 new listings raising RMB130 billion-RMB170 billion.

As for Hong Kong, the research forecasts that it is to have about 120-130 IPOs raising more than HKD400 billion. This includes more than 10 secondary new listings will raise proceeds of over HKD100 billion and another four to five jumbo listings from new economy businesses each raising at least HKD10 billion.