Q1-Q3 2022 Review and Outlook for Chinese Mainland and Hong Kong IPO markets

The report indicates that Shanghai Stock Exchange and Shenzhen Stock Exchange are set to retain 1st and 2nd positions in the global IPO ranking by funds raised as of 30 September 2022, based on existing figures and estimates. Hong Kong Stock Exchange will rise to 4th place after jumbo IPOs by a retail business and a battery manufacturer.

Since its introduction in June 2019, registration-based reform has been providing a strong boost to the A-share market. It has supported listings by many technology and innovative businesses seeking to raise funds. This is clear given IPO volume and funds on the SSE STAR Market and ChiNext are expected to have surpassed those on the two main boards in the first three quarters.

CMSG expects that for the full year of 2022, about 140 to 160 companies will have listed on the SSE STAR Market, raising RMB230 billion to RMB260 billion. Another 190 to 210 businesses are expected to have listed on ChiNext, raising RMB190 billion to RMB215 billion. The Shanghai and Shenzhen main boards are likely to have had about 80 to 100 IPOs raising as much as RMB140 billion to RMB170 billion, with Beijing Stock Exchange hosting about 50 to 80 new listings raising approximately RMB10 billion to RMB15 billion. Boosted by various economic stimulus measures, the amount of IPO funds raised is likely to continue to rise, and the A-share IPO market should mark another record year in 2022.

In Hong Kong, the upcoming launch of the Fast Interface for New Issuance (FINI), anticipated enhancement of Southbound Stock Connect to include Renminbi (RMB) settlement, continuous listings of China concept stocks, and potential mega listings will stimulate momentum in Q4 2022. The CMSG forecasts that Hong Kong will have seen 70 IPOs raising at least HKD110 billion by the end of 2022. A pipeline of more than 140 listing applications, including China concept stocks, biotech companies, and a few potentially huge listings, will drive this result.

The anticipated launch of FINI will also help reduce market risks and improve efficiency, which is particularly important amid ever-increasing market volatility. Expanding connectivity with the Chinese Mainland through the potential Southbound Stock Connect with RMB-based settlement, and the inclusion of overseas issuers in Stock Connect, will not only enhance Hong Kong's attractiveness as an international IPO venue. It will also help Hong Kong to better complement the Mainland capital market, help both markets seize more financing opportunities in the longer run, and strengthen Hong Kong's prominent role in helping RMB internationalization

Far fewer Chinese companies will have listed in the US, raising considerably less funds, in the first three quarters of 2022 than in the same period of 2021. This is due to ongoing delisting risks from the Holding Foreign Companies Accountable Act. The CMSG expects the recent agreement on inspections and investigations of audit firms based in China and Hong Kong to encourage more Chinese companies to consider or reconsider the US market as a listing destination.