2024 A-Share Market to Significantly Slow Down, Trending Towards HK or US Listings

Financials Author: Yiru Qian Apr 09, 2024 11:34 AM (GMT+8)

According to IPO Zaozhidao, on April 8, Deloitte's China Capital Market Services Division released a review of the China mainland and Hong Kong IPO markets in the first quarter of 2024, as well as an outlook for the whole year.

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Deloitte's recent report revealed that as of March 31, 2024, in terms of the amount of new shares financed, the New York Stock Exchange took first place by completing four of the top ten global IPOs, including that of Amer Sports, the world's second-largest sporting goods company. Nasdaq followed with three smaller-scale IPOs from the top ten global IPOs. The Swiss Stock Exchange ranked third as a skincare company became the largest IPO globally in the first quarter of 2024. The Indian Stock Exchange ranked fourth due to numerous new listings.

The Shanghai Stock Exchange ranked fifth, while the Shenzhen Stock Exchange stood at seventh. The Hong Kong Stock Exchange ranked tenth.

In the first quarter of 2024, A-share IPOs raised only CNY 23.6 billion for 30 new shares, compared to CNY 65.1 billion raised by 68 new shares in the first quarter of 2023. The number of new shares dropped by 56%, and the financing amount decreased by 64%. The Beijing Stock Exchange and the ChiNext Board led in the number of new shares, while the Shanghai Stock Exchange led in the amount of funds raised by newly listed companies. The Shanghai Stock Exchange recorded CNY 14.8 billion raised by 11 new shares, followed by the Shenzhen Stock Exchange with CNY 7.1 billion raised by 11 new shares. The Beijing Stock Exchange had the lowest financing amount, raising CNY 1.7 billion from 8 new shares.

Compared with the performance of the past two years, the A-share new share market is expected to significantly slow down in 2024.

The Capital Market Services Division predicts that there will be approximately 115 to 155 new shares listed in the A-share market in 2024, raising CNY 139 billion to 166 billion. The forecast is lower than earlier predictions, with fewer new shares expected in each sector. The Shanghai and Shenzhen main boards are expected to have 25 to 35 companies newly listed, raising CNY 74 billion to 84 billion, followed closely by the ChiNext Board with 35 to 45 new shares raising CNY 30 billion to 37 billion. It is expected that the Shanghai Science and Technology Innovation Board will have 20 to 25 new shares listed, raising CNY 28 billion to 35 billion, and another 35 to 50 new shares will be listed on the Beijing Stock Exchange, raising CNY 7 billion to 10 billion.

Meanwhile, the new share market in Hong Kong continues to slow down, but started to rebound in March. The number of new shares decreased by 33% in the first three months of this year, and the total financing amount decreased by 30%. Under the backdrop of a depressed market, Hong Kong did not see any large or medium-sized new listings. The Stock Exchange of Hong Kong received a 24% increase in the number of listing applications, and a 12% increase in pending listing applications, compared to the same period last year. The timetable for US interest rate cuts over the next three quarters will guide capital flows and become a major factor driving a rebound in the Hong Kong new share market in 2024. Shifting from A-share listings to listing in Hong Kong may become a trend.

The Capital Market Services Division predicts that Hong Kong will have 80 new shares listed in 2024, raising HKD 100 billion. Highlights of the new share market include listings from well-known companies, special purpose acquisition company mergers and acquisitions, international companies, Chinese companies shifting from A-share listings to Hong Kong listings, and listings of companies on the Growth Enterprise Market.

As A-share new share activities slowed down in the first quarter of 2024, some Chinese companies turned to listing in the United States. In the first quarter of this year, the number of new listings was the same as in the first quarter of 2023, but there was a significant increase in financing amount due to a mega-listing project by a consumer company. In the first three months of this year, 13 Chinese companies were listed locally, raising USD 1.467 billion, while 13 new shares raised USD 553 million in the same period last year.

Xie Minghui, Managing Partner of Deloitte's China Capital Market Services Division, Eastern China, Hong Kong Listing Business, commented: "The market for Chinese companies listing in the United States will face a fate similar to that in Hong Kong, with more companies originally planned for A-share listings planning to switch to listings in the United States to raise funds on a more favorable schedule. However, we expect most Chinese companies to complete their listings in the United States before the next presidential election."