The Strategist

Shanghai may overtake Hong Kong by total IPOs volume

11/02/2021 - 03:25

Shanghai could overtake Hong Kong this year by the number of IPOs held, as well as by the amount raised in such offerings. This writes Bloomberg, whose analysts have studied the data on past and in the near future planned IPO on the two largest stock exchanges in the Asia-Pacific region.

65 IPOs were held in Hong Kong since the beginning of the year, with total sum raised reaching $ 34.6 billion. This is a good result for the stock exchange, but in recent months the activity has slowed - for example, in October there was only one placement. This may be due to foreign investors' concerns about the growing political risks to Chinese companies due to the tough and proactive actions of Chinese regulators on sectors ranging from fintech and online education services to healthcare and retail.

At the same time, Chinese investors appear to be less disturbed by such regulatory activity: mainland China has already seen an 11-year high of 320 IPOs since the beginning of the year. Most of these are on the country's most important stock exchange, the Shanghai Exchange, and two very large IPOs are due to take place there in the coming weeks. The first is the flotation of China Telecom, one of China's largest telecommunications companies.

At the start of the year, the New York Stock Exchange delisted the company following an executive order from former US President Donald Trump imposing additional requirements for foreign companies whose shares are traded on US exchanges. China Telecom is due to float its IPO in Shanghai as early as next week, with plans to raise $7.3bn.

Another major IPO planned for this year in Shanghai is the listing of Syngenta, a Swiss pesticide and seed manufacturer owned by China National Chemical Corp. Bloomberg estimates that with these upcoming IPOs, the total amount that will be raised in mainland China will be $59 billion, with the bulk of that amount coming from the Shanghai exchange.