1H 2023 Review and Outlook for Chinese Mainland and Hong Kong IPO markets

The Capital Market Services Group (CMSG) forecasts that Shanghai Stock Exchange and Shenzhen Stock Exchange will have been the world's largest and 2nd largest listing destinations by funds raised in 1H 2023. Shanghai hosted three of the world's 10 biggest IPOs while Shenzhen recorded one during the period, with the four IPOs coming from the semiconductor or energy and resources sectors. New York Stock Exchange will have taken 3rd place with the world's largest IPO, which was from a consumer healthcare company. Abu Dhabi Securities Exchange and Nasdaq will have taken 4th and 5th place respectively and the Stock Exchange of Hong Kong will have ranked 6th.

The A share market is expected to have had 174 new listings raising RMB209.5 billion in 1H 2023 against 169 IPOs raising RMB311.9 billion in 1H 2022. This would represent a 3% rise in the number of IPOs and a 33% drop in funds raised.

The A-share market is expected to record more IPO funds raised in the whole of 2023 than it did in 2022, a record year, boosted by a continuous revival in economic and business activities, Government policies and measures to stabilize growth, and normal issuance of IPOs.

For the full year, the A-share market is expected to record 430 to 510 IPOs raising approximately RMB620 to RMB699 billion, versus 2022's 424 new listings raising RMB586.8 billion. The SSE STAR Market is expected to have 120 to 140 listings raising RMB240 billion to RMB275 billion, followed by ChiNext with 150 to 170 new listings raising about RMB185 billion to RMB210 billion. The main boards in Shanghai and Shenzhen will have around 60 to 80 IPOs raising RMB175 billion to RMB190 billion, with about 100 to 120 listings raising RMB20 billion to RMB24 billion on Beijing Stock Exchange.

Hong Kong is expected to have had 31 IPOs raising HKD17.8 billion in 1H 2023, versus 24 IPOs raising HKD17.7 billion in 1H 2022. This would represent a 29% rise in deal volume and a 1% increase in deal value.

Once the US Fed indicates clearly when the interest rate hike cycle will end and China introduces more economic stimulus measures, we expect the Hong Kong IPO market to re-activate, driving a repositioning of funds' investment strategies to Asia's high-growth regions like China. The Government's supportive direction for privately owned enterprises has added momentum to the technology sector, which will facilitate related listings and spin-offs. As larger Hong Kong-listed international companies are brought into Stock Connect, more overseas companies, including some large Asian businesses, will start looking to list in Hong Kong.

For this full year, Hong Kong is forecast is to record nearly 100 new listings raising around HKD180 billion.

Following the US Public Company Accounting Oversight Board's announcement that it gained access to the working papers of Chinese listing registrants in the US in mid-December 2022, the US IPO market for Chinese companies improved in 1H 2023, with 20 Chinese firms going public raising HKD626 million against just four IPOs raising USD100 million in 1H 2022.