IPOs steady, seen increasing in H2

The domestic A-share IPO market has remained stable so far as the first half draws to a close. An estimated 64 companies have been listed, raising a total 60.4 billion yuan (US$8.75 billion), up 2 percent from the same period a year ago, according to EY’s mid-year report on initial public offerings.

IPOs from companies with revenue below 1 billion yuan accounted for 43 percent of the total, up 17 percentage points from a year earlier.

There’s also a decline of 35 percent in average proceeds in the first half due to the lack of mega deals, but the figure still remained at a high 944 million yuan, the highest since the first half of 2018 when giant enterprises went public.

Globally, the number of IPOs is expected to reach 507 in the first half, with total proceeds of US$71.9 billion with 13 of these listings having a market capitalization over US$1 billion.

EY attributed the slowdown in IPO activity to an unusually quiet first quarter this year amid ongoing geopolitical tensions, trade issues such as US-China tensions and Brexit. As markets stabilize and tensions ease, it forecast IPOs will increase in the second half. 

The NASDAQ is the first choice for Chinese companies to go public in the US, with a total of 15 Chinese listings in the first half and total proceeds of US$1.342 billion.

The number of IPOs on the Hong Kong Stock Exchange continues to lead the world, while the NYSE continues to be most active by value.

”The launch of the sci-tech innovation board (STAR Market) and the trial of the new registration system are expected to bring about a certain number of IPOs and promote the active A-share IPO market in the second half of the year," said Ringo Choi, EY’s Asia-Pacific IPO Leader.

"On the other hand, as the registration system has been implemented, stringent supervision remains unchanged. De-listing standards will be stricter and more companies will be de-listed, but it will help improve the quality of listed companies."

The telecommunications, media and technology, materials and industrial enterprises sectors led IPO by volume.

The number of companies on the IPO waiting list of the China Securities Regulatory Commission is 419, up 51 percent compared with a year earlier.

“The official launch of STAR Market will improve the efficiency of service innovation enterprises in the domestic capital market by supporting the growth of those with development potential and high market recognition,” said Jacky Lai, a partner at EY Assurance Services.