Shanghai and Shenzhen stock exchanges continue to chip away at Hong Kong’s IPO attractiveness
With Shanghai and Shenzhen adopting speedier listing processes and a strong IPO pipeline, the two mainland bourses are set to extend their dominance next year
Hong Kong stock exchange will face mounting competition from Shanghai and Shenzhen bourses, as speedier listing approval process and strong demand from investors expected next year will help them to extend their top rankings.
In its annual IPO review and outlook for 2018, EY laid out the prediction based on the number of IPOs and proceeds raised this year – 436 companies mopped up 230.4 billion yuan (US$35.1 billion) from the A-share market.
These represent an increase of 92 per cent in number and 53 per cent in proceeds compared to 2016, and make the Shenzhen and Shanghai stock exchanges the top two respectively in number of IPOs completed this year. Hong Kong was ranked third, with a total of 160 IPOs.
However, in terms of proceeds raised, the New York Stock Exchange ranked top in 2017, with US$39.5 billion, followed by Shanghai at US$20.9 billion; and Hong Kong at US$16.5 billion.
While the number of A-share IPOs reached a record high, a lack of IPO that raised over 5 billion yuan per deal also means that all these IPOs’ proceeds raised combined was just 47 per cent the total amount raised in 2010, which was the second biggest year for IPOs in numbers at 347.
There is still good demand from mainland investors for IPOs and so long as the Chinese stock markets do not collapse [in 2018], we believe this pipeline can get listed
However, “there were 508 companies [as of December 22] waiting in the pipeline to have their IPOs approved by the China Securities Regulatory Commission,” said Ringo Choi, IPO leader for Asia-Pacific at EY. “There is still good demand from mainland investors for IPOs and so long as the Chinese stock markets do not collapse [in 2018], we believe this pipeline can get listed.”