Q1 2021 Review & Outlook for Chinese Mainland & HK IPO Markets

According to the report, the two markets are well supported to continue to perform vibrantly in the rest of 2021, thanks to the ample liquidity from various monetary and economic easing measures in the world to dissipate the negative impact brought by the ongoing pandemic. But, in general, as investors deepen their understanding about the new economy businesses, their valuations are expected to return to a more reasonable level.

The report also finds that Nasdaq has taken over the global IPO leadership in terms of number of IPOs and funds raised in Q1 2021 at the boost of positive market sentiment over the US economic outlook, listings of health care, pharmaceutical and biotech companies, and three mega listings. The Hong Kong Stock Exchange came second with its three jumbo deals, followed by the New York Stock Exchange and London Stock Exchange. The Shanghai Stock Exchange took 5th place.

The benefits of the pilot registration-based regime in ChiNext is magnifying and the SSE STAR Market is demonstrating a stable performance. As such, we noticed IPO paces in the two markets increasing over the quarter, yet fundraising scale appeared to have dwindled

Despite a bill that governs more stringent oversight over foreign company listings, the sentiment over the outlook of the US economy improved driving more Chinese companies, in particular in cloud-computing and technology service-related, went public in the US in Q1 2021.

The National Public Offering Group maintained its forecast for Hong Kong IPO market in 2021. That represents about 120-130 IPOs in 2021 raising more than HKD400 billion. This is backed by economic easing measures bracing strong liquidity to seek high return in the market through investment funds and vehicles, also the continuous wave of secondary listings of China concept stocks in the US, and listings of new economy companies, including those in the biotech sector. The ongoing reform efforts such as the listing regime reform for overseas issuers in Hong Kong and the potential launch of SPAC listings are making Hong Kong an even more attractive listing venue.

The SSE STAR Market and ChiNext are expected to lead growth in the Mainland IPO market in the rest of 2021. 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, whereas the Main Boards in Shanghai and Shenzhen are likely to have about 120-150 new listings raising RMB130 billion-RMB170 billion.

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