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People next to a bull sculpture on the Bund in Shanghai on June 9, 2021. The city accounted for more than a third of IPO funds raised so far in 2022, according to EY. Photo: AFP

China IPO flurry increases Asia’s share of listings amid plummeting global volume and proceeds, EY report says

  • Asia-Pacific exchanges account for 61 per cent of global IPOs and 69 per cent of the proceeds raised so far in 2022, says report
  • Shenzhen’s US$26 billion and Shanghai’s US$47.5 billion, account for 18 per cent and 32 per cent of global proceeds raised, respectively
IPO

Initial public offerings (IPOs) have plummeted globally including in Asia-Pacific (APAC) in 2022, but thanks to a burst of activity on China’s exchanges, the APAC region has expanded its share of new listings compared with a year ago and now accounts for most of the deals and funds raised worldwide, according to a report from EY.

Global IPOs declined 44 per cent to 992 in the first nine months of the year compared with the same period in 2021, with proceeds falling 57 per cent to US$146 billion, according to the report released on Thursday.

The number of IPOs in Asia declined 25 per cent to 608, and proceeds fell 22 per cent to US$100.8 billion during the same period.

However, Asia accounts for 61 per cent of the global number of IPOs and 69 per cent of the proceeds raised so far in 2022, up from 46 per cent of the deals and 38 per cent of the proceeds in 2021. In addition, Asia has played host to five of the top 10 IPOs so far.

Steven Lam Hoi-yuen, executive director and co-chief executive officer of Gogox Holding, which had its IPO in Hong Kong on June 24, 2022. Photo: SCMP / Dickson Lee

EY attributes the global slowdown to mounting macroeconomic challenges, market uncertainties, increasing volatility and falling global equity prices.

“Many companies’ IPO plans were put on ice in early 2022,” said Paul Go, global IPO leader at EY. “Provided that market uncertainties and volatility subside, the launch of long-awaited blockbuster IPOs may reverse the sentiment.”

Supportive government policies in mainland China have driven IPO activity, pushing the overall numbers for Asia higher relative to other regions.

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American exchanges saw the sharpest decline, with the number of deals slumping 72 per cent to 116 and proceeds diving by 94 per cent to US$7.5 billion.

Shenzhen, with 148 deals, and Shanghai, with 119, ranked as the first and second exchanges globally in terms of the number of IPOs. Shenzhen’s deals raised US$26 billion and Shanghai’s raised US$47.5 billion, which equates to 18 per cent and 32 per cent of the global total, respectively.

Hong Kong’s bruised IPO market has started to see some recovery with a small flurry of debuts in the third-quarter, the report said. This includes two lacklustre IPO debuts on Thursday from electric-vehicle maker Zhejiang Leapmotor and China Vanke’s property service unit, Onewo.
A woman walks past the Shenzhen Stock Exchange on August 17, 2020. The exchange has hosted 148 IPOs and raised US$26 billion in funds so far in 2022, according to EY. Photo: Getty Images

“IPO activity in Hong Kong is expected to be stronger, despite being impacted by the US market volatility, the appreciation of US dollar and geopolitical risks,” said Terence Ho, Greater China IPO leader at EY.

Ho added that China’s economy is seeing “imminent signs of recovery” and he is “cautiously optimistic” that the IPO market will be more active towards the last quarter of the year.

Overall, technology companies launched the most IPOs worldwide so far this year. However, the average deal size dropped 53 per cent to US$123 million year-on-year.

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The energy sector drove the biggest deals, with an increase of 176 per cent year on year.

The third quarter saw the lowest proceeds from special-purpose acquisition companies (SPACs) since the same period in 2016. SPACs, also known as blank-cheque companies, are created to raise finances and buy assets within a limited period of time, usually 18 months to 24 months.

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