Regulatory curbs hurt mainland China IPOs, ceding first-half crown to Hong Kong

The Star

12 hours ago

Mainland China's three stock exchanges had a sluggish first half, raising a third of the bounty from initial public offerings (IPOs) in Hong Kong, due to a regulatory crackdown that has hobbled fundraising since August 2023 and left the primary market in the lurch.
Some 50 companies raised a combined 33.6 billion yuan (US$4.7 billion) by selling new shares on the nation's three exchanges, according to data compiled by Bloomberg. That was a third of the US$13.5 billion raised on the Hong Kong stock exchange, which leapfrogged 12 spots from a year earlier to become the world's top-ranking IPO destination in the first half.
'As long as the regulatory curb remains in force, the IPO market won't return to normalcy,' said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. 'But the good thing is that as a result, more good-quality companies in emerging industries will be listed going forward.'
Mainland China's most valuable offering in the first half of the year was Zhongce Rubber Group, a Hangzhou-based tyre maker that drew 4.07 billion yuan by selling shares on the Shanghai Stock Exchange, according to Bloomberg. That was just a fraction of the US$5.24 billion that was raised in Hong Kong in May by Contemporary Amperex Technology, the world's largest maker of batteries for electric vehicles.
Consumer-electronics maker Arashi Vision came in second place on the mainland, pulling off a 1.94 billion yuan offering on the Shanghai bourse's tech-heavy Star Market. Shenzhen Kaifa Technology, which makes smart metering terminals, ranked third after completing an offering valued at 1.17 billion yuan on the Beijing Stock Exchange.
Holding shares of the 50 IPOs since their debuts on the mainland fetched an average return of 214 per cent, according to Bloomberg data. But those gains were inflated by regulations, as new shares were priced at around 23 times earnings in an effort to make sure there were no flops.
A ray of hope emerged last month when Wu Qing, the CSRC's chairman, said China would reinstate rules that allowed listings of unprofitable companies to support tech innovation.
Listings of pre-profit companies had been suspended since the regulatory clampdown started. Wu's remark was seen by some as a sign that the regulator was softening its stance on IPOs.
According to Shanghai-based brokerage Shenwan Hongyuan Group, the move would have a positive impact on IPOs and the pace of new shares could quicken slightly in the second half.
It said it expected between 80 and 120 companies would raise between 70 billion and 83 billion yuan from IPOs this year. - SOUTH CHINA MORNING POST