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China – Capital Markets Reform Will Boost IPO In Activity, Says Report.

8 January, 2015

 


Initial public offering (IPO) activity in China will strengthen in 2015 as a result of “deepening reform” of the country’s capital markets, according to a new report from professional services firm PwC.

The report said that fund-raising is expected to reach 130bn renminbi (CNY) (USD 21bn) after 125 IPOs in 2014 raised funds worth a total of CNY 78.6bn (USD 12bn).

 

PwC said among the 2014 IPOs on the Shanghai and Shenzhen stock markets, 43 listed on the Shanghai A-share market raising a total of CNY 34.2bn (USD 5.5bn) funds, and 70% of the listed companies were from the consumer products, services and industrial industries.

 

Thirty-one companies listed on the Small and Medium Enterprise (SME) Board of the Shenzen Stock Exchange raising CNY 22.2bn (USD 3.5bn) in funds, with 91% of the listed companies from the consumer products, services and industrial industries, PwC said.

 

According to PwC, the average figure for funds raised in mainland China in 2014 was CNY 600m (USD 96m).

 

PwC’s China and Hong Kong markets leader Frank Lyn said: “In 2014, after the re-opening of the IPO market in China, despite there being a long queue of companies wanting to list, the final number of approved companies to IPO was low due to the implementation of the ‘new national nine principles’ and a long-term market strategy for reform from the government.”

 

Lyn said: “The stock market soared at the end of 2014 with new records for volume and new A-share accounts. We are optimistic about future market trends and believe that the ‘new normal’ of economic growth and solid macroeconomic policy, the Shanghai-Hong Kong Stock Connect and the upcoming registration reform will facilitate a new chapter for the IPO market in 2015.”

 

PwC’s China assurance partner Jean Sun said: “We expect the Chinese capital markets to develop steadily and healthily under a well regulated environment, which will be conducive to IPO market activities.”

 

The US continued to lead the global IPO market in 2014, both in terms of total volume and value, PwC said. In 2014, funds raised in the US increased by 54% compared to 2014, with the New York Stock Exchange and Nasdaq accounting for CNY 534.2bn (USD 86bn). According to PwC, Hong Kong came second with 122 IPOs raising 227.8bn Hong Kong dollars (HKD) (USD 29bn), an increase of 33% compared to 2013.

 

PwC anticipates about 120 new IPOs in Hong Kong in 2015 raising a total of around HKD 200bn in funds.

 

Reuters reported last June that China’s mainland IPO market had reopened, four months after it appeared to go dormant. According to Reuters, the China Securities Regulatory Commission gave final approval to 10 firms to list IPOs on the Shanghai and Shenzhen stock exchanges.

 

Pinsent Masons

 

For further information, please contact:

 

Andrew Masraf, Partner, Pinsent Masons

andrew.masraf@pinsentmasons.com

 

Homegrown Capital Markets Law Firms in China 

 

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