Technology innovation, advanced manufacturing, green development, and the SME sector will be the key areas supported for A-share IPOs this year.
Recently, PwC released a report on January 2, 2024, detailing the performance and outlook of the IPO markets in Mainland China and Hong Kong in 2023. The report demonstrates that the number of IPOs in the A-share market slowed down in 2023, with a total of 313 new listings for the year, raising a financing amount of CNY 356.4 billion. Compared to the previous year, the number of new listings decreased by 26%, and the financing amount declined by 39%.
In comparison to other major capital markets worldwide, the number of IPOs and the financing amount in the A-share market in 2023 exceeded those of other global markets remarkably. The Shanghai Stock Exchange and the Shenzhen Stock Exchange ranked first and second globally in terms of IPO financing amount.
Specifically, the Shanghai Stock Exchange had 103 new listings with a financing amount of CNY 193.7 billion, while the Shenzhen Stock Exchange had 133 new listings with a financing amount of CNY 148.1 billion. The Beijing Stock Exchange entered a period of rapid development, with a total of 77 new listings in 2023 and a financing amount of CNY 14.6 billion.
Liang Weijian, Managing Partner of PwC China, stated, "Despite the global slowdown in capital market development, the application enthusiasm for the Shanghai, Shenzhen, and Beijing exchanges remains high. With the steady advancement of the comprehensive registration system, China's capital market will demonstrate strong vitality." PwC predicts that the number of IPOs in the A-share market for the whole year of 2024 will be between 200 and 240, with a total financing amount ranging from CNY 160 to 190 billion.
In terms of different sectors, the ChiNext board continued to lead in 2023, with 110 new listings, and the STAR Market ranked first in terms of financing amount with CNY 143.9 billion. The Beijing Stock Exchange is developing rapidly and may become a new track for highly specialized and innovative growth companies in the A-share market, as it is less affected by the tightening IPO regulations and gains increased attention from enterprises. Among the top ten IPOs in 2023, six came from the STAR Market, two from the Shanghai Main Board, and one each from the ChiNext board and the Shenzhen Main Board.
The industrial and materials, information technology and telecommunication services, and consumer sectors were the top three industries in terms of IPO quantity and financing amount. In the top ten IPOs, semiconductor companies accounted for the top three, with a financing amount exceeding 50%. Ni Jing'an, Technology Industry Leader Partner at PwC China, expects IPOs in 2024 to focus on supporting technology innovation, advanced manufacturing, green development, and the SME sector, particularly in supporting SME IPOs. The Beijing Stock Exchange is expected to enter a period of rapid development in 2024. After the introduction of the new system for direct listing on the Beijing Stock Exchange, the number of companies applying to list, their profitability, and technological content are expected to significantly increase.
As for the Hong Kong Stock Exchange, IPO market activity in 2023 significantly slowed down due to factors such as global economic uncertainties. There were a total of 73 new listings for the year, raising a financing amount of HKD 46.3 billion, mainly concentrated in retail, consumer goods and services, industrial and materials, healthcare and pharmaceuticals, and information technology and telecommunication services sectors. Compared to the same period last year, the number of IPOs decreased by 19%, and the financing amount decreased by 56%.
However, many Chinese companies still choose Hong Kong as their preferred destination for overseas listings.
On January 5th, the lidar company RoboSense (Chinese: 速腾聚创, 2498:HK) was successfully listed on the main board of the Hong Kong Stock Exchange, becoming the "first share of lidar in Hong Kong stocks". On January 2nd, China bubble tea brand MIXI ice cream＆tea Co., Ltd. (Chinese: 蜜雪冰城) submitted a prospectus to the Hong Kong Stock Exchange. The co-sponsors were Bank of America, Goldman Sachs and UBS Group AG. On the same day, Goodme (Chinese: 古茗) also submitted a prospectus to the Hong Kong Stock Exchange, sponsored by Goldman Sachs and UBS.
With its advantages as a stable capital market and various regulatory reforms and optimization measures, the IPO channel in Hong Kong remains active. According to PwC, it is expected that 80 companies will go public in Hong Kong in 2024, with a total financing amount exceeding HKD 100 billion, potentially repositioning the Hong Kong IPO market among the top three global fundraising markets.