“IPOs are coming fast in Mainland China, with Shanghai set to host the world’s 2 biggest listings this yr as domestic investors look past the government’s regulatory crackdown” — Paul Ebeling
Not so in Hong Kong, a global center for IPOs that has seen just offering so far this month. International investors who use the financial hub as a window into China are increasingly concerned by policy risks in sectors ranging from technology and education to food and healthcare.
The Mainland is also benefiting from Beijing’s desire to elevate its domestic markets, including the creation of a new Nasdaq-style Star board. Some of the country’s biggest telecommunications operators are looking to Shanghai.
China Telecom Corp., one of the nation’s largest telecom carriers, is a perfect example. After being delisted by the New York Stock Exchange on national security grounds in January, it wishes to raise $7.3-B in Shanghai next wk, setting a new high mark for Y 2021.
Syngenta Group, the Swiss seed and fertilizer business owned by China National Chemical Corp, is also preparing a $10-B listing on Shanghai’s Star board.
If the two offers meet expectations, funds raised through first-time share sales on the mainland this year will climb to about $59-B our data show.
Chinese domestic IPO proceeds are already at their highest level for this period in 11 yrs, while the number of deals, 320, is at record, the data show.
China’s domestic stock market has performed strongly in the last 2 yrs as regulators have also made IPO listing easier through the launch of the Star Board in Y 2019.
The CSI 300 Index, China’s equity benchmark, has rallied 35% in the past 2 yrs, compared with a 4% gainer for Hong Kong’s Hang Seng Index. The Mainland measure has also held up better than the Hong Kong gauge since the start of July when China’s clampdown on the tech sector intensified.
Aligning with Beijing: We feel that the Chinese domestic market has become more and more attractive for specific companies that are in specific industries..
And there is also the matter of choice for domestic investors. Unlike global funds moving money between Hong Kong and other financial hubs around the world, mainlanders have few options, further supporting the outlook for listings in the onshore market.
Have a prosperous week, Keep the Faith!