China’s A-Share Market Becomes the World’s Largest for IPO’s in 1H 2022

Despite the challenging global environment for issuing IPOs, Chinese A-Share IPOs accounted for about 40% of the world’s total IPO volume in 1H 2022

Beijing – Bloomberg today released its 2022 1H China Capital Market League Tables. According to its initial public offering (IPO) league table report, in the first half of 2022, a total of 178 IPOs were issued in China’s A-share market, raising nearly USD 40 billion, a record high volume for the same period since 2011. The A-share market accounted for 39% of global IPO financing, making it the world’s largest IPO market in 1H 2022, surpassing the US IPO market by 133% (US IPO volume during that period was USD 17 billion in 1H 2022).

In the first half of the year, Chinese companies issued a total of 196 IPOs around the world, raising nearly USD 41.6 billion, accounting for 40.5% of global IPO financing. However, due to volatility caused by the COVID-19 epidemic and a changing macro environment, Chinese companies have since faced greater pressure on stock issuance and financing. At the same time, the average underwriting fee for Chinese companies to be listed in global markets increased from 3.9% in the first half of 2021 to 4.9% in the first half of 2022, reflecting the increasing difficulty in issuing IPOs.

The top three sectors by number of Chinese companies’ IPOs in 1H 2022 were industrials, technology and healthcare, of which 60 were issued by industrial companies alone. The IPO size of companies in the technology and energy sectors ranked first and second respectively. There were 6 IPOs from the energy industry in 1H 2022, while the average size of an IPO was relatively large at RMB 8.7 billion (or USD 1.3 billion). CNOOC (600938 CH Equity) became the largest single IPO in the first half of 2022, raising funds of RMB 28.1 billion (or USD 4.38 billion), accounting for 10.6% of the total funds raised by Chinese companies.

David Qu, Senior Economist for Asia at Bloomberg Economics, commented, “The People’s Bank of China has maintained a relatively loose monetary policy this year, which is conducive to financing activities in the A-share market. At the same time, the increasingly complex international environment and the disclosure issue between the US and China were the main reasons for the decline in the number of Chinese companies issuing IPOs in the US. Looking ahead, we believe that a relatively loose financial environment will continue to help IPOs in the A-share market. In terms of overseas listings, more Chinese companies may choose the Hong Kong market.”

In the first half of 2022, Chinese-funded companies significantly reduced their listings in Hong Kong and the US compared with the same period last year. A total of 176 Chinese-funded companies chose to list on China’s A-Share market. The total value of listings in A-shares was about 18 times higher than that of Hong Kong and US markets combined. Three Chinese companies chose to list in the US, far lower than the 38 IPOs in the same period last year; 17 Chinese companies chose the Hong Kong stock market compared to 43 in 1H 2021. In terms of underwriting fees, the Hong Kong stock market’s cost was significantly lower than that of the US and Mainland China. The average underwriting fee of Hong Kong stocks was 2.5% of gross IPO proceeds, while that of US listings was 8.2% and that of A-shares was 5.0%. Fees in Hong Kong and the US have also risen, hitting the highest rates in the same period since 2014, reflecting the increasing difficulty of listing in Hong Kong and the US. CITIC Securities, China Securities and China International Capital Corporation ranked first to third in China’s A-Shares equity IPO underwriting table in 1H 2022, with a combined IPO market share of about 46% by amount raised.

Sharnie Wong, Senior Analyst at Bloomberg Intelligence, said, “Chinese brokers may slash costs to counter the IPO slump amid regulatory and market headwinds. Disruption to the deal-making process from COVID-19 lockdowns in 1H may impact the pipeline in 2H.”

Bloomberg users can access {LEAG<GO>} in the Bloomberg Terminal, load the “Report” tab to read “2022 H1 China Capital Market League Tables” and “2022 H1 Greater China M&A League Tables”, as well as other global and China league tables.

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Irene Gu, igu3@bloomberg.net, +86-10-6649-7535

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