SINGAPORE – China’s IPO market is booming after a blockbuster 2020 next year, according to the chief investment officer of China’s financial services firm.
It’s been a “very exciting” year for China’s domestic stock market, William Ma of Noah Holdings (Hong Kong) told CNBC’s “Squawk Box Asia” on Monday, raising nearly $ 75 billion from about 400 listings. .
The firm’s chief investment officer Ma said, “In terms of the size and volume of the IPO in the domestic China market, it has captured a historic … peak over the past 10 years.”
The trend is likely to continue, he said, with “huge demand from both domestic and institutional investors”, while companies in the new economy sector want to go public.
People attended the listing ceremony of Shenzhen Longtech Smart Control Co., Ltd. and Shanghai High-Road Food Technology Co., Ltd. at the Shenzhen Stock Exchange on December 2, 2020 in Shenzhen, Guangdong Province, China.
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China’s global IPO dominance
According to EY’s research, Chinese companies’ stock listings have dominated the rankings in 2020.
In the top 10 lists globally, Chinese companies also made up half of the list, taking the top three spots as well. These include the listing of Chinese chipmaker SMIC on the Star Market in Shanghai as well as the secondary listing of e-commerce heavyweight JD.com in Hong Kong. No Asia-Pacific firm outside China managed to break into the top 10.
There was also a notable exception among Chinese companies, but the financial technology giant and the Alibaba-affiliated Ant Group. The firm’s much-awaited dual-list in Shanghai and Hong Kong is the world’s largest public listing. But that IPO was abruptly suspended in November as the company faced regulatory scrutiny.
EY’s Asia-Pacific IPO leader, Ringo Choi, told CNBC that the strength of Chinese companies on the list reflects the importance of the mainland’s economy as well as its ability to influence the performance of the stock exchange.
That’s why every market is trying to make those mainland company or businesses public, Choi said.
Nevertheless, the potential market returns for listing in the domestic market are likely to be an attractive proposition primarily for Chinese companies, he said.
EY’s research reported that the first-day return rate for an IPO in 2020 came in at 187% for the Nasdaq-style Star Market of the Shanghai Stock Exchange, and 44% for mainboards in Shanghai.
In comparison, Snowflake – the largest software IPO ever and the largest non-mainland firm to make a public debut this year – rose more than 111% in its first day trading on the New York Stock Exchange in September.