Consulting agency Ernst & Young (EY) revealed a report on Dec. 21 that the initial public offerings (IPO) volume on the Shanghai Stock Exchange (SSE) ranked first worldwide compared to other markets.
EY reported that the number of A-share IPOs and the amount of funds raised have increased significantly since the beginning of this year. According to the agency, the amount of funds raised throughout 2020 has hit a record high since 2010, rocketing to 470.7 billion yuan.
Compared with last year, the number of IPOs and the amount of funds raised this year increased by 97% and 86% respectively. The agency estimates that 395 companies will have been listed on the A-share market by the end of 2020, while service provider Deloitte predicted the number to be 388.
Even though the Covid-19 pandemic has tremendously affected the global economy, IPO markets remain resilient and continue to grow, especially the A-share market, which showed great vitality in terms of total IPO volume and fundraising amount, according to the analysis of Zhaofeng He, EY’s Greater China IPO Service Lead Partner.
Adequate Liquidity and mature investment sentiment have boosted the A-share market, as noted by Anthony Wu, leader of the A-share Capital Market unit of Deloitte’s National Public Offing Group, in an interview with China Daily. Moreover, the tech-heavy STAR Market affiliated to SSE has also helped to expand the scale of companies going public this year, including AI chip giant Cambricon and Chinese quantum information technology pioneer QuantumCTek.
Small and medium-sized companies have become the main forces to arrive in the SSE. Data from EY shows that over 30% of the fundraising comes from IPOs worth less than 1 billion yuan, slightly higher compared to the same period last year. In terms of industries the companies belong to, technology, media and telecommunication top the fundraising list while industrial companies ranked first in the number of IPOs.
The registration-based system also contributed to the IPO size. China Securities Regulatory Commission (CSRC) in April announced the registration mechanism for ChiNext, the Nasdaq-style growth enterprises board at the Shenzhen Stock Exchange (SZSE), marking the beginning of the pilot adoption of such a system, aiming to improve market transparency and authenticity. Later in October, the State Council of the P.R.C. further pushed the mechanism, expanding to other markets such as the STAR Market and the SSE.