SINGAPORE – According to the chief investment officer of a Chinese financial services industry, the IPO market in China will continue to flourish next year even after a quick survey in 2020.
It has been a ‘very exciting’ year for the domestic stock market in China, William Ma of Noah Holdings (Hong Kong) told CNBC’s Squawk Box Asia on Monday, adding that about $ 75 billion was obtained from about 400 listings.
“As for the IPO size and volume in the domestic market in China, it has reached a historic … peak in the last ten years,” said Ma, chief investment officer at the firm.
The trend is likely to continue, he said, with ‘huge demand’ from both local and institutional investors, while companies in the new economic sector want to go public.
People attend the listing event 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, China.
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China’s global IPO dominance
According to research from EY, the scholarship lists in 2020 dominated the rankings.
Among the top 10 listings worldwide, Chinese companies made up half of the list, while also ranking the top three. These include the listing of Chinese disc maker SMIC on the STAR Market in Shanghai, as well as the heavyweight JD.com’s e-commerce listing in Hong Kong. No Asia-Pacific firm outside of China has managed to make the top 10.
However, there was also a notable exception among the Chinese companies – the giants for financial technology and the Antib group, Alibaba. The firm’s expected double listing in Shanghai and Hong Kong will be the largest initial listing in the world. However, the stock market was suddenly suspended in November because the company was undergoing regulatory investigation.
EY’s Asia Pacific IPO leader Ringo Choi told CNBC that the strength of Chinese companies in the list shows the importance of the continent’s economy as well as its ability to influence the performance of the stock market.
“That’s why every market is trying to lure that continental enterprise or industry to go public,” Choi said.
The potential market returns for domestic listing are likely to be an attractive proposition for mainland Chinese businesses, he said.
EY research has shown that the first-day rate of return for IPOs in 2020 will come at a whopping 187% for the Nasdaq-style STAR market of the Shanghai Stock Exchange, compared to 44% for the main board in Shanghai.
By comparison, Snowflake – the largest IPO software ever and the largest non-mainland company to make a public debut this year – rose more than 111% on its first trading day on the New York Stock Exchange in September.