The Hong Kong Exchange Building.
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Initial public offerings (IPOs) in Greater China increased in the first half of this year, offsetting declines seen elsewhere due to the impact of the coronavirus pandemic.
In the first six months, listings in Greater China increased by 29% and the amount of money raised shot up 72% compared to last year, according to data from consultancy EY. The Hong Kong and Shanghai exchanges took the lead, in terms of the number of deals, as well as the total amount raised.
In contrast, both the number of IPOs and the amount raised in other regions decreased significantly compared to the same period last year.
In the Americas, listings and revenue fell 30% each. Meanwhile, the number of listings in Europe fell 47% and revenue fell 48%.
“The impact of the COVID-19 pandemic continued to play a significant role in declining IPO activity in the first half of 2020,” said EY, who published the report this week.
However, Asia Pacific as a whole was the outlier, with an overall increase of 2% as revenue increased 56%.
Hong Kong and Shanghai exchanges fuel the IPO scene in Asia
The Asia Pacific IPO scene was tougher as some economies reopened earlier and were among the first to recover from the initial impact of the coronavirus, EY said.
“Strong activity at STAR Market and more mega IPOs at HKEx helped drive the increase,” EY said, referring to the Nasdaq-style technology board in Shanghai: the Science and Technology Innovation Board, or STAR Market, as well as the Hong Kong stock exchange.
Several Chinese tech giants already listed in the US have recently released secondary listings in Hong Kong.
Last month, Chinese gaming giant Netease launched its listing in Hong Kong, raising 21.09 billion Hong Kong dollars ($ 2.7 billion).
Chinese e-commerce firm JD.com also started trading on the Asian financial center in June, raising 30.05 billion Hong Kong dollars ($ 3.87 billion).
Analysts have predicted that more Chinese companies listed in the US will flock to Hong Kong or the mainland as Sino-US tensions mount.
Amid a wave of anti-Chinese sentiment in the United States, the United States Senate passed a bill last month that could essentially ban many Chinese companies from listing on US exchanges.
“Possible changes in the US listing regulations for Chinese companies may increase IPO activity on the mainland and Hong Kong stock exchanges,” EY wrote in its report.
Already, he said, more than 138 companies have presented public filings in Hong Kong, indicating that companies “have a strong desire to go public when the correct IPO window opens.”
Technology leads the way in Chinese markets
In Hong Kong, technology was among the three sectors that attracted the most money raised, and the other two were health care and real estate.
“The number of publicly traded technology companies will continue to lead the trend as technology will continue to be a key driver of the development of the Chinese economy,” said EY.
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