2024 Review and 2025 Outlook for Chinese Mainland & HK IPO markets

• Quality first and support for technology and innovation sectors are set to drive listings in the A-share market
• Sino-US trade arrangements, China's economic performance and stimuli and US Fed interest rate cut are keys to the outlook for the Hong Kong market

The Deloitte China Capital Market Services Group today released its 2024 review and 2025 outlook for the Chinese mainland and Hong Kong initial public offering (IPO) markets.

According to its analysis, National Stock Exchange of India has emerged to become the world’s largest IPO venue in 2024 by IPO funds raised, following its listing the world’s 3rd largest IPO by a Korean car manufacturing group and a large deal volume. Nasdaq and New York Stock Exchange came 2nd and 3rd. The former's position was due to the completion of the world’s largest IPO for a cold storage warehousing company. The latter had more larger listings. Listings of a Chinese home appliance group, beverage company, an integrated logistical services company and an advanced driver assistance systems and autonomous driving solutions provider cemented 4th place for Hong Kong Stock Exchange. Tokyo Stock Exchange rose to 5th as a result of its listing of a subway operator. Shanghai Stock Exchange and Shenzhen Stock Exchange took 6th and 8th respectively.

As a result of a heightened scrutiny over the entire capital market and implementation of new capital market measures and policies, including the State Council’s nine new measures, IPO activity in the A-share market in 2024 was significantly lower than it was in 2023. As regulators continue to put the potential issuers first, support the technology and innovation sectors, and encourage companies to enhance and consolidate their sectors through mergers, acquisitions and restructurings, the number of new listings and funds raised in the A-share market in 2025 are expected to increase from the levels seen in 2024.

The Hong Kong IPO market started to pick up in September 2024 with a mega listing and upon the US Fed cut its interest rate for the first time in four years and China introduced economic stimuli. Its momentum is expected to pick up further in 2025 when the US makes another interest rate cut, and more Chinese economic stimuli are introduced. Sino-US trade arrangements, in particular the US tariffs on Chinese products and China economic performance are other key factors that will affect market liquidity and investment and listing sentiment.

The A-share market is anticipated to have seen 101 IPOs raising RMB68.0 billion by the end of 2024 against 313 new listings raising RMB356.3 billion in 2023. This represents reductions of 68% in deal volume and 81% in deal size. Shanghai Stock Exchange is set to have raised the most funds (RMB33.5 billion), followed by Shenzhen Stock Exchange (RMB30.0 billion) and Beijing Stock Exchange (RMB4.5 billion). ChiNext will have recorded the most listings (38) and raised the most funds (RMB22.6 billion) among all the other markets in 2024.

"The State Council’s nine new measures and related initiatives introduced since April 2024 have resulted in a slower pace for A-share IPOs than in 2023. To ensure a high-quality capital market for the country in the longer run, we expect these measures and initiatives to carry forward into 2025. Government support for the technology and innovative sectors and quality first philosophy will help lift the performance of the IPO market in 2025,” says Dick Kay, National Offering Services leader of the Capital Market Services Group, Deloitte China.

Hong Kong is expected to have recorded 69 IPOs raising approximately HKD87.6 billion by 31 December 2024. This is a 1% drop from 2023's 70 IPOs but an 89% increase in proceeds from HKD46.3 billion in 2023. A jumbo listing from a Chinese home appliance group and three large listings from a Chinese beverage company, a logistical services company and an advanced driver assistance systems and autonomous driving solutions provider contributed to Hong Kong's performance in 2024.

"We are very pleased to see Hong Kong's stellar performance and milestones in 2024. It remained in 4th position globally in IPO fundraising in 2024 with the support of listings from leading Chinese companies after a slowdown in 2023. At last, it hosted listings from first three special technology companies and a de-SPAC listing after the introduction of these two new regimes in 2023 and 2022 respectively. While the former demonstrates the effects of the cooperations between the mainland and Hong Kong capital markets, the latter shows the success of the reforms of the Hong Kong capital market that were made in the last few years," adds Robert Lui, Southern Region Hong Kong Offering Services leader of the Capital Market Services Group, Deloitte China.

In 2025, the Capital Market Services Group predicts that listings from A-share issuers, leading Chinese companies, US-listed China concept stocks, and overseas companies will drive the Hong Kong IPO market. The market should record about 80 IPOs raising approximately HKD130 billion to HKD150 billion. Technology, life science and health care and consumer business will remain the drivers of the IPO market.

"The streamlined timeline for new listing applications and enhanced collaboration between Hong Kong and Mainland China's capital markets are set to attract more A-share issuers and leading Chinese enterprises to Hong Kong. This represents a substantial opportunity for the Hong Kong market, especially considering that only about one-third of the top 500 A-share listed companies by market capitalization are currently listed here," says Edward Au, Southern Region managing partner, Deloitte China.

"In addition, potential changes to Sino-US trade relations under the incoming US administration might increase geopolitical uncertainties, prompting more Chinese companies and US-listed China concept stocks to turn to Hong Kong as their preferred overseas listing hub. Alongside the prospect of further US interest rate cuts and additional Chinese economic stimulus policies aimed at sustaining growth, these factors are expected to bolster the momentum and investor sentiment in Hong Kong’s IPO market as we move into 2025," adds Au.

In 2024, more Chinese companies went public and raised more funds in the US amid a slowdown in the A-share IPO market. About 53 Chinese businesses will have listed in 2024, raising USD1.843 billion against 34 companies raising USD855 million in 2023. Most of this year's proceeds were driven by the top three IPOs by an electronic vehicle manufacturing company and two autonomous driving technology companies.

"Although more Chinese companies could opt for Hong Kong instead of the US in 2025, we believe some smaller Chinese businesses, especially from the technology segment will still flock to the US given the receptiveness of US' investors towards innovative business models, its longstanding reputation as an international market, and the availability of more comparable peers in the market for better valuations," explains Allen Lau, Capital Market Services Group National leader, Deloitte China.

Notes to editors:

Unless specified otherwise, all statistics are updated with our estimates and analysis as of 31 December 2024 and excludes listings from by investment trust companies, closed-ended investment companies, closed-ended funds, special purpose acquisition companies (SPACs) and de-SPACs.

Sources for A-share IPO statistics: the China Securities Regulatory Commission, Shanghai Stock Exchange, Shenzhen Stock Exchange, Beijing Stock Exchange, Deloitte estimates and analysis.

Sources for Hong Kong IPO statistics: the Stock Exchange of Hong Kong, Deloitte estimates and analysis; excludes GEM to MB transfers and SPAC and de-SPAC listings.

Sources for global and US IPO (Chinese companies) statistics: Shanghai Stock Exchange, Nasdaq, the Stock Exchange of Hong Kong, National Stock Exchange of India, Tokyo Stock Exchange, Bloomberg, Dealogic and Deloitte analysis.