Shang­hai tops New York as leader for new com­pany list­ings

The China Post - - BUSINESS - LI XIANG

Shang­hai has edged out New York to be­come the global leader for new com­pany list­ings dur­ing the first quar­ter af­ter rais­ing 33.4 bil­lion yuan (US$5.4 bil­lion).

A re­port from ac­coun­tants Deloitte Touche Tohmatsu Ltd. on Fri­day showed that the Shang­hai Stock Ex­change sur­passed ri­vals New York and Hong Kong for the first time when it came to ini­tial public of­fer­ings.

Dur­ing the first three months of the year, 35 com­pa­nies launched new list­ings in Shang­hai. The fran­tic pace of IPOs comes ahead of the launch of new reg­u­la­tions gov­ern­ing new list­ings later this year.

When that hap­pens, the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion will al­low in­vestors and the mar­kets to make their own judg­ments about a com­pany’s value and the risks of buy­ing its shares.

At the mo­ment, com­pa­nies plan­ning to list on China’s stock mar­kets have to un­dergo a re­view and ap­proval process with the CSRC mak­ing the fi­nal de­ci­sion. But changes have been in the pipe­line since 2013 to re­vamp the process.

This has trig­gered a wave of new list­ings in Shang­hai be­fore the new reg­u­la­tions come into place, push­ing the New York Stock Ex­change off the num­ber one spot. In fact, there were around 50 per­cent fewer IPOs on the NYSE, rais­ing US$3.52 bil­lion.

New list­ings in Hong Kong dur­ing the first three months of the year slowed to just 25 com­pa­nies, rais­ing US$2.45 bil­lion. This was 59 per­cent down from the same pe­riod last year, ac­cord­ing to the Deloitte re­port.

Tong Chuanjiang, head of A-share IPO busi­ness for north­ern China at Deloitte China, said that fall­ing in­ter­est rates, re­duc­tions in the re­serve re­quire­ment ra­tio by the Peo­ple’s Bank of China and pos­i­tive sen­ti­ment to­ward the re­form of the new share sales sys­tem have boosted the ap­petite for IPOs.

Deloitte is pre­dict­ing that the A-share mar­ket in China will likely see be­tween 260 to 300 new list­ings this year and that could raise be­tween 150 bil­lion and 180 bil­lion yuan.

The mar­ket may also see a large flota­tion from an en­ergy and re­sources com­pany, ac­cord­ing to the ap­pli­ca­tions filed with the CSRC.

Last year, Hong Kong was ranked sec­ond be­hind New York in the global IPO mar­ket with com­pa­nies rais­ing US$26.7 bil­lion.

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