Chinese mainland expects 100 to 120 IPOs for the year

The Chinese mainland is expected to see 100 to 120 initial public offerings seeking to raise 200 billion yuan (US$30.09 billion) this year, according to PwC.

The number of IPOs in the second half of the year is likely to maintain the trend in the first six months, PwC said in a report released today.

They fell substantially in the first six months as only 63 IPOs were listed on the Shanghai and Shenzhen stock markets, representing a 74 percent slump from the same period last year, the report said. 

The value of the IPOs also dropped 26 percent from a year earlier to 93.1 billion yuan in January to June.

Of the 63 IPOs in the first half, 36 were listed on the Main Board of the Shanghai Stock Exchange with a total value of 64.5 billion yuan, according to the report.

By sector, data showed IPOs were predominantly from the industrial product, consumer goods and services, Internet technology and telecommunications sectors.

"At the outset of 2018, more stringent criteria for IPO approvals were implemented by the regulator," said Lin Yizhong, Markets Leader of PwC Chinese Mainland and Hong Kong. "This has helped to prioritize listings of higher quality, while inhibiting listing by companies with issues. As a result, many enterprises have withdrawn their applications voluntarily."

The number of companies waiting to list dropped from 519 at the end of last year to 307 in June following the stricter approval process for A-share IPOs which led a shorter queuing time.

Looking ahead to the second half year, PwC expected the number of IPOs to maintain the trend of the first half, leading to an estimated total number of 100 to 120 IPOs for the whole year, raising around 200 billion yuan.

"We anticipate the first Chinese Depositary Receipt listing in the second half, and we predict IPOs in the A-share markets will be affected by a range of factors in addition to the strict approval process," Lin said.

The CDR is a new mechanism introduced by the Chinese stock market regulator to entice overseas-listed Chinese technology firms such as Alibaba to return and list on the A-share market. Implementing the CDR and launching the London-Shanghai Stock Connect will reflect the importance of the reforms undertaken by China’s financial industry to become more international in the second half of 2018, PwC said.

Sun Jin, Assurance Partner of PwC China, said that the A-share market has been transformed from its former high-intensity approach to a quality-oriented market.