Press releases

Chinese mainland to implement State Council’s nine new measures and capital market policies in the 1+N documents and take effect in IPO activity; hopes for Hong Kong to improve in Q3 or Q4

Published: 21 June 2023

  • Heightened control over the quality of A-share listings applicants subdued IPO activity in H1 2024. The nine new measures and policies in the 1+N documents for the capital market that are being implemented should bring positive impact to the IPO market in H2 2024 and promote the high-quality development of the A-share capital market
  • US rate cut, improved Chinese economic performance, the diversion of A-share listing applicants to Hong Kong and Chinese companies being encouraged to list in the city should help drive the Hong Kong IPO market in H2 2024

The Deloitte China's Capital Market Services Group (CMSG) today released its H1 2024 review of the Chinese mainland and Hong Kong initial public offering (IPO) markets and outlook for H2 2024.

Statistics indicate that in the first six months of the year, New York Stock Exchange will have topped the global IPO ranking, hosting four of the world’s top 10 IPOs, followed by Nasdaq with two of the 10 largest listings globally. National Stock Exchange of India will have come in 3rd with a high volume of new listings. After completing the world’s largest IPO of H1 2024, the listing of a Spanish fashion and fragrance company, Bolsa de Madrid will have risen to 4th place. Shanghai Stock Exchange is set to be in 5th, with Hong Kong Stock Exchange 9th and Shenzhen Stock Exchange 10th.

The State Council’s announcement in April of nine guidelines to promote high-quality development of the A-share market, and related measures, brought heightened scrutiny of A-share listing applicants and issuances in H1 2024. This prompted a slowdown in Chinese mainland IPO activity in H1 2024 that is set to affect the offering scale for the entirety of 2024. As the nine new measures and policies in 1+N documents for the capital market are being implemented, more positive impacts to the market should emerge. The anticipated results of these series of policies will eventually be reflected in future A-share IPO activities.

With a rebound in the Hang Seng Index since mid-April, market liquidity and valuations in Hong Kong improved somewhat in H1 2024. Funds from the US, Europe and the Middle East likely remained on the sidelines, hence liquidity and valuations were not conducive to large or mega IPOs. Although a continued revival of the Chinese economy will be crucial, long-anticipated US interest rate cut, which had been expected in June, will be the most critical factor in determining how far the Hong Kong IPO market can rebound and if more prominent deals are completed this year. Also, given the State Council’s nine rules and China Securities Regulatory Commission’s announcement that it will support top Chinese companies to list in Hong Kong, more A-share IPO applicants could switch their listing plans to Hong Kong.

In H1 2024, the Chinese mainland is expected to have recorded a total of 44 new listings raising RMB32.5 billion, against 173 IPOs raising RMB208.7 billion in H1 2023. This would represent a 75% decline in the number of IPOs and 84% drop in funds raised. The number of new listings and proceeds raised in all five mainland markets are likely to have declined from their levels in H1 2023. ChiNext is likely to have had the most IPOs, with the Main Board in Shanghai having raised the most funds. Shanghai Stock Exchange is forecast to have raised RMB18.9 billion from 15 new listings, followed by Shenzhen Stock Exchange with RMB11.6 billion from 19 IPOs and Beijing Stock Exchange raising only RMB2.0 billion from just 10 IPOs.

“The slowdown in overall pace of listings in the A-share market is likely to be temporary. We anticipate more high-quality applicants and issuers will become available for investors, providing more promising returns and contributing to the economy. In H1 2024, Shanghai Stock Exchange will have retained 5th place in the global IPO ranking by proceeds. We look forward to seeing the two mainland stock exchanges soon soar in the global IPO ranking once again as they did in previous years,” says Dick Kay, Offering Services leader of the Capital Market Services Group, Deloitte China.

Hong Kong is forecast to have had about 30 new listings raising HKD13.1 billion in H1 2024, representing a 3% drop in IPO volume and 27% reduction in proceeds from 31 IPOs raising HKD17.9 billion in H1 2023.

“Although there were no large and mega listings in H1 2024, we were excited to see the debuts of the 1st specialist technology company and 1st GEM listing since its recent reform. Both are important breakthroughs for the Hong Kong capital market after years of reform. The former diversifies the market and the latter should help revive GEM, which had no new listings for the previous three years. We expect more specialist technology companies and small-and-medium-sized businesses to list in the remainder of 2024 given the positive feedback of these two new listings,” adds Robert Lui, Southern Region Hong Kong Offering Services leader of the Capital Market Services Group, Deloitte China.

Taking the ongoing trend of heighted scrutiny over issuers and IPO applicants and the positive impact of all the policies and measures that are being implemented into consideration, the CMSG maintains its full-year forecast that the A-share market will have about 115 to 155 new listings raising approximately RMB139 billion to RMB166 billion. The main boards in Shanghai and Shenzhen are expected to have 25 to 35 IPOs raising RMB74 billion to RMB84 billion, followed by 35 to 45 new listings raising RMB30 billion to RMB37 billion on ChiNext. The SSE STAR Market is anticipated to have 20 to 25 new listings raising RMB28 billion to RMB35 billion and Beijing Stock Exchange is forecast to have 35 to 50 IPOs raising RMB7 billion to RMB10 billion.

“The pace of A-share IPOs has reduced since April. But the restart of offering review meetings in mid-May was a positive development and sent confident signals to the market. We believe as the nine guidelines of the State Council and policies of the 1+N documents for the capital market are being implemented and take effect, more positive impact will be reflected in the A-share market in the remainder of 2024 and promote its higher development in the long run,” says Tony Tang, A-Share Offering leader of the Capital Market Services Group, Deloitte China.

However, the CMSG has adjusted its full-year forecast for the Hong Kong IPO market to HKD60 to HKD80 billion from 80 IPOs.

“We expect the Chinese economy to have a stronger recovery in the second half, driven by Government measures to stimulate growth and stabilise the market. This will boost investor confidence, attracting more IPOs. Anticipated interest rate cut by the US Fed in Q3 or Q4 could also see more funds from the US, Europe, and the Middle East redirect to Hong Kong, which would further improve liquidity and valuations and encourage more IPO activity,” says Edward Au, Southern Region managing partner, Deloitte China.

“An active pipeline of more than 100 IPO applicants, specialist technology companies, de-SPAC transactions, large offerings delayed from 2023 and prominent Chinese businesses that are being encouraged by the mainland regulator to list in Hong Kong, plus a pipeline of GEM listing candidates, will drive the Hong Kong IPO market in H2 2024. A-share IPO applicants changing their listing plans to Hong Kong, other Chinese companies listing in Hong Kong and return listings of China concept stocks will be other key drivers. IPO candidates from the consumer sector, artificial intelligence, hard tech, life sciences and green and sustainable sectors could be the highlights. Nevertheless, some of the prominent Chinese companies that are being encouraged to list in Hong Kong by the mainland regulator already have primary listings in the A-share market. When liquidity and valuations in Hong Kong improve, we expect listing conditions for these businesses to become more favourable, bringing more positive impact to the IPO market,” adds Au.

As the Chinese economy continued to improve and A-share IPOs came under heighted scrutiny in H1 2024, more Chinese businesses went public in the US, with 23 IPOs raising about USD677 million, up from 20 new listings raising HKD626 million in H1 2023.

“We saw more Chinese companies filed their US offerings with the Chinese regulator and be approved in H1 2024. The figure is already up more than 1.5-fold this year from its level in the whole of 2023. This shows the attractiveness and importance of the US capital market in the development of Chinese businesses. Most of these will be small offerings. We expect more companies will flock to list in the US from China before the US presidential election on 5 November,” says Allen Lau, Capital Market Services Group leader, Deloitte China.


Notes to editors:

Unless specified otherwise, all statistics are updated with our estimates and analysis as of 30 June 2024 and excludes listings from by investment trust companies, closed-ended investment companies, closed-ended funds, and special purpose acquisition companies.

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 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, Bloomberg, Refinitiv and Deloitte analysis.

(Chinese version)

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