SINGAPORE – According to the chief investment officer of a Chinese financial services company, the IPO market in China will continue to grow next year, even after a 2020 blockbuster.
It has been a “very exciting” year for China’s domestic stock market, William Ma of Noah Holdings (Hong Kong) told CNBC’s “Squawk Box Asia” Monday, raising about $ 75 billion from approximately 400 listings.
“In terms of the size and volume of the IPO in the domestic Chinese market, it has reached a historic … peak in the last 10 years,” said Ma, chief investment officer at the company.
That trend is likely to continue, he said, with “massive demand” from both domestic and institutional investors as companies in the new economy look to go public.
People attend the listing ceremony of Shenzhen Longtech Smart Control Co., Ltd and Shanghai Hi-Road Food Technology Co., Ltd at the Shenzhen Stock Exchange on December 2, 2020 in Shenzhen, Guangdong Province of China.
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China’s Global IPO Dominance
According to EY research, stock lists of Chinese companies have dominated the rankings in 2020.
In the top 10 listings worldwide, Chinese companies made up half of the list, while also making the top three. These include the listing of the Chinese chipmaker SMIC on the STAR Market in Shanghai and the secondary listing of e-commerce heavyweight JD.com in Hong Kong. No Asia-Pacific company outside of China managed to crack the top 10.
However, there was also one notable exception among the Chinese companies: the financial technology giant and the Alibaba-affiliated Ant Group. The company’s long-awaited dual listing in Shanghai and Hong Kong would become the world’s largest first public listing. But that IPO was abruptly suspended in November because the company is under scrutiny by regulatory authorities.
Ringo Choi, EY’s Asia-Pacific IPO leader, told CNBC that the strength of listed Chinese companies demonstrates the importance of the mainland’s economy, as well as its ability to influence stock market performance.
“That’s why every market tries to attract those companies or companies on the mainland to go public there,” said Choi.
Still, the potential market returns for a domestic listing are likely to be an attractive proposition for mainland Chinese companies, he said.
EY research showed that the first-day return for IPOs in 2020 is a whopping 187% for the Shanghai Stock Exchange’s Nasdaq-style STAR Market, versus 44% for the Shanghai motherboard.
In comparison, Snowflake – the largest software IPO ever and the largest non-mainland company to make a public debut this year – rose more than 111% on its first day of trading on the New York Stock Exchange in September.