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Treasury & Capital Markets
China’s A-share IPO market reflects global sentiment
Secondary market no longer buys into high valuations
Janette Chen 1 Dec 2021

Despite another historic year for A-share initial public offerings, the secondary market appears sluggish. This is in line with the global sentiment. But the Chinese IPO market is still active even with the tightened regulatory environment.

The year about to end is not a particularly good year for newly listed shares. About half of the IPO deals with a size of more than US$1 billion that are listed on the stock exchanges of London, New York, Hong Kong and Mumbai are trading below their issue price, according to market data. This indicates that the secondary market no longer buys into the high valuations.

Investors in China's A-share market share a similar sentiment. Most of the newly listed companies this year have recorded sluggish growth in their stock prices.

A total of 245 companies listed on the A-share market in the first half of 2021. And their stock prices recorded an average increase of 8.44% in the first three months since their listing. They had seen double-digit, sometimes even triple-digit growth in the past five years.

At the same time, regulators are tightening the oversight of IPOs, and at least 200 applications have been suspended as of November this year, with Ant Financial being the most prominent.

All this has not stopped the A-share market from achieving another historic year after hitting a decade-high in fundraising in 2020.

During the first three quarters of this year, 373 companies went public on the A-share market. Of these, 145, or 39% of the total, listed on the Growth Enterprise Market (GEM), 126 on the Science and Technology Innovation Board (STAR Market), 75 on the Shanghai Stock Exchange (SSE), and 27 on the Shenzhen Stock Exchange (SZSE).

The four boards raised a total of 376.8 billion yuan (US$59.14 billion) in the nine months to September, up 5.93% from the same period last year. The SSE took the lead by attracting 155.7 billion yuan, followed by the STAR Market with 115.3 billion yuan. The SZSE was the only board that recorded a decrease in the number of new listings – down by nine companies with the funds raised dropping by 4.5 billion yuan from a year ago.

The capital goods sector recorded the highest fundraising amount of 65.4 billion yuan, followed by telecommunications with 55.5 billion yuan. 

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Alex Kim
Alex Kim
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Alex Kim
Alex Kim
CEO
Upbit APAC
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The future of digital assets
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