IPO activity strong in H1 as economic growth rebounds, report fi nds
China’s IPO activity had strong momentum in the fi rst half of 2017 with a signifi cant increase in new listings on the A- share market, thanks to a rebound in economic growth in the period, according to a report from global consulting fi rm EY released on Monday.
According to the EY report, the fi rst- half total for the A- share market will be 246 IPOs with total funds raised of 125.6 billion yuan ($ 18.37 billion), up 303 percent and 336 percent year- on- year respectively.
The increased in listings has reduced the IPO backlog for approval at the China Securities Regulatory Commission ( CSRC) by 20 percent from the end of 2016 to 585 at present, according to the report.
However, the capital market was on a downward trend in the second quarter and IPOs experienced a slight slowdown, which might have helped stabilize the market, Shen Yan, an EY assurance service partner, said at the release event.
“Proceeds of IPOs fell 20 percent compared with the fi rst quarter and the pace of IPO approvals also declined, which helped stabilize the market to a certain extent,” Shen said.
The slowdown also came as regulators tightened IPO rules, especially for “backdoor listings.” There were only four such IPOs in the A- share market in the fi rst half of 2017, down from 12 in the same period last year, according to the report.
In terms of sectors, the report said that both the number of IPOs and funds raised from industrial enterprises ranked fi rst. Other active industries also included technology, media and telecommunications, materials, consumer products and retail and healthcare. Money raised from IPOs in the fi nancial industry fell in the absence of large banks being listed.
The stock market in Hong Kong also saw signifi cant growth in the fi rst half of the year, with 69 companies going public and raising HK$ 53.8 billion ($ 6.9 billion). IPO volume and proceeds increased by 82 percent and 24 percent respectively compared with last year, the report noted.