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Shanghai could be the world's biggest IPO market this year
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Shanghai is on track to steal the global IPO crown this year, bolstering a drive by Beijing to reduce its reliance on foreign financial markets and giving China a powerful one-two fundraising punch with regional powerhouse Hong Kong.To get more shanghai breaking news, you can visit shine news official website.
Stock exchanges in Greater China — including Hong Kong, Shanghai and Shenzhen — have raised a combined $123 billion through hundreds of new corporate listings so far this year, according to data compiled by research firm Dealogic. That total has been driven in large part by Ant Group, which is raising $34 billion by listing in Hong Kong and Shanghai, the largest IPO in history. But other marquee listings, including SMIC and JD.com, have also put the trio of exchanges in Greater China on pace to vault ahead of the New York Stock Exchange and Nasdaq for the second year in a row.
The combined might of Hong Kong and mainland China has long made the region a popular destination for IPOs, though that's largely because of how free and open Hong Kong is to investment.
This year, though, Shanghai is far more of a heavyweight than it has been in the past. The $61 billion that has been raised so far in 2020 through public offerings on the city's exchange is more than triple the total raised by this point in 2019, according to Dealogic.
Shanghai has so much momentum, in fact, that its stock exchange is likely to rank No. 1 in the world for IPOs this year, according to estimates from global accountancy firm Deloitte. (Dealogic, which does not issue year-end projections, says the Chinese city's exchange has never held that distinction.)
"We fully expect Shanghai Stock Exchange to secure the crown jewel in the global ranking [of IPO venues] by the end of 2020," Edward Au, managing partner of Deloitte China's southern region, told CNN Business. Hong Kong will likely rank second overall, he predicts.A major factor behind China's IPO boom is Beijing's desire to rely less on foreign money and technology, and expand the amount of oversight it has over prized businesses.
Historically, companies that list in Shanghai have been big, state-owned banks, energy and real estate firms. Other major Chinese businesses, especially those in tech, usually turn to Wall Street or Hong Kong to find investors because of barriers to listing in the mainland, including a prohibition on dual-class shares, which give corporate executives more power.
But that has been changing. President Xi Jinping's campaign for self-reliance has intensified as Beijing fights a brutal trade and technology war with the United States.
The Nasdaq-like Star Market, which debuted on the Shanghai Stock Exchange in July 2019, is an example of that shift. In a first for mainland China, the Star Market allowed companies that are unprofitable to list. A US-style IPO registration system also streamlined the process to apply for a public offering, giving issuers and investors more control over pricing and timing. Companies were also allowed to offer dual-class shares, as exchanges in New York and Hong Kong do.
"We need to encourage and support 'hard technology' firms to list" on the Star Market, Xi said during a visit to Shanghai last November. He cited a desire to "break the foreign stranglehold on us in certain key technologies."
In the 15 months since the Star Market launched, nearly 200 companies have listed and raised a combined $40 billion — not counting Ant Group. After the financial tech firm completes its listing, the Star Market will have accounted for 60% of mainland China's IPO market this year.
This post was edited by wisepowder jack at November 3, 2020 9:09 AM EET