Shanghai Stock Exchange. [Photo/Sipa]
While initial global public offering activity in 2022 was underwhelming due to geopolitical tensions and multiple market uncertainties hampering economic growth, the IPO market remained buoyant in the A-share market last year as the country’s technology-based boards began to show more vitality.
Leading consulting firm KPMG estimates that global IPOs and total funding will drop by 50 percent and 60 percent, respectively, year-on-year in 2022. The York Stock Exchange and Nasdaq are down more than 90 percent for the year.
But the A-share market has shown its resilience amid global gloom. While the number of IPOs fell 15 percent year-on-year to 416 in 2022, total funding rose 9 percent to 584.9 billion yuan ($87.03 billion), breaking the record set in 2021. according to professional services provider EY.
Deeper capital market reforms, the promotion of a registration-based IPO mechanism and the creation of a multi-layer capital market contributed to record returns in the A-share market in 2022 as the global economy faced various challenges, Zhao Haizhou said. , East region A-share leader for the capital markets services group at Deloitte.
It should be noted that the proceeds from the IPO on the STAR market of the Shanghai Stock Exchange. The board, which aims to grow “hard technology” companies such as chipmakers, biopharmaceuticals and artificial technology companies, accounted for 40 percent of the year’s IPOs. fundraising in the A-share market in 2022, according to EY’s calculations. This is the first time that the STAR market is ahead of the main A-share board where the large capitalization is listed in terms of IPO funding.
In addition, of the 10 largest IPOs listed on the A-share market last year, as measured by revenue, seven were listed on the STAR market.
Meanwhile, the number of IPO cases registered at ChiNext in Shenzhen, Guangdong, a board to promote integration between traditional industries and new technologies and new business models, has reached 150 by the end of 2022, according to the latest market tracker data. Wind Info, ahead of all other boards in the A-share market.
As Felix Fei, a partner at EY Assurance, understands, the development of “hard technology” that has become China’s key national strategy has fueled structural changes in the A-share market in recent years. While financial services providers used to top the IPO revenue list, their lead has been ceded by technology, media, telecommunications, biopharmaceuticals and healthcare companies. Industrial companies with core technologies have also advanced in terms of IPO financing.
Leading manufacturing, which is expected to underpin China’s economic growth in 2023, will see more successful IPOs this year, Fei said. Companies that use special and complex technologies to produce new and unique products, which are also in line with the country’s strategic development path, will also promote IPO activities in the annual Beijing Stock Exchange, launched for technologically advanced small businesses. and medium enterprises.
While the BSE saw the successful flotation of 75 new companies in 2022 with a total funding of 14.9 billion yuan, Deloitte estimates that up to 120 companies will announce their IPOs on the BSE in 2023, with total proceeds reaching 24 billion yuan.
Shanghai’s STAR market is expected to see 120 to 140 new listings in 2023, with total fundraising estimated at 305 billion yuan to 340 billion yuan. According to Deloitte, ChiNext is likely to include 150 to 170 IPOs in 2023, with revenue estimated at up to 210 billion yuan.
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