Chinese IPO Volumes, Values In Robust Shape Before Market Wobbles Slammed On The Brakes - Data

Tom Burroughes

9 September 2015

Initial public offerings in China for the first six months of this year raised proceeds of RMB22.1 billion ($3.5 billion), with 42 such liquidity events taking place, according to latest figures on the technology, media and telecoms space by PricewaterhouseCoopers.

During the first half of 2015, Shenzhen GEM had 25 IPOs worth RMB10.2 billion in proceeds, which comprised 46 per cent of the overall amount raised, while Shenzhen SME had five such flotations with RMB3.2 billion in proceeds, making up approximately 15 per cent of the overall amount raised. The main board of the SSE had nine IPOs valued at RMB7.4 billion in total, accounting for 33 per cent of the overall amount raised.

The data, up to the end of June, reflects a period that happened before mainland China stock markets crashed, leading to worries that China’s economy is headed for a possible hard landing. A report by S&P Capital argued, regarding the volatility of Chinese stocks and its economy, that "investors have become accustomed" to this state of affairs. The Shanghai Stock Exchange Composite Index, which had risen 154 per cent from July 2014 to June 2015, has fallen sharply, giving up most of the gains for the year so far.

IPOs have been important generators of fresh wealth in the Asia-Pacific region and are tracked by wealth managers seeking future clients. In recent years, the largest ever has been the $25 billion float on the New York Stock Exchange of China's e-commerce conglomerate Alibaba, founded by Jack Ma.

Chinese regulators have put a short-term freeze on IPOs against the backdrop of recent market turmoil, a fact acknowledged by Wilson Chow, China/Hong Kong technology, media and telecommunications leader, PwC China.

“As we can see, a more streamlined and transparent listing procedure for IPOs has made the domestic exchanges more attractive. However, the positive momentum is expected to slow down in the second half of 2015, given the temporary freeze to IPOs by the regulatory body in order to cope with recent significant capital market fluctuations,” he said.

China’s TMT initial public offerings performance compares with global figures showing some 59 IPOs raising $12.2 billion, PwC said in its quarterly review of IPOs (applying to deals valued at or above $40 million).

While the number of offerings increased, bolstered by a 57 per cent rise in Q2 over Q1, total proceeds continued to decline. They dropped from $24.8 billion in Q3 2014 to $6.2 billion in Q2 2015, impacted by an absence of big ticket IPOs so far this year, the report said.

The 10 IPOs from Europe generated the largest proceeds, equating to $4.3 billion. The 22 IPOs from China, however, represented the largest number of total offerings in the field of technology. Only two such offerings were listed outside of China.

“In the long run, we still anticipate significant growth in TMT listings on the domestic exchanges as a result of the introduction of the new registration based system as well as the continuation of multi-level capital market reforms,” Chow said.