SINGAPORE – China’s IPO market is expected to continue growing next year, even after blockbuster 2020, according to the investment director of a Chinese financial services company.
It was a “very exciting” year for China’s domestic stock market, William Ma of Noah Holdings (Hong Kong) told CNBC’s “Squawk Box Asia” on Monday, adding that about $ 75 billion was raised from about 400 quotes.
“In terms of the size and volume of the IPO in the domestic market in China, it has reached a historic peak in the past 10 years,” said Ma, the company’s investment director.
This trend should continue, he said, with “huge demand” from domestic and institutional investors, while companies in the new economy sector are looking to go public.
People attended the listing ceremony for Shenzhen Longtech Smart Control Co., Ltd and Shanghai Hi-Road Food Technology Co., Ltd on the Shenzhen Stock Exchange on December 2, 2020 in Shenzhen, China’s Guangdong province.
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China’s global IPO domain
Stock listings of Chinese companies dominated the ratings in 2020, according to an EY survey.
Among the top 10 listings globally, Chinese companies represented half the list, while occupying the top three. This includes the listing of Chinese chip maker SMIC on the STAR Market in Shanghai, as well as the secondary listing for e-commerce heavyweight JD.com in Hong Kong. No Asian-Pacific company outside of China has managed to break the top 10.
However, there was also a notable exception between Chinese companies – the financial technology giant and the Ant Group affiliated with Alibaba. The company’s highly anticipated dual listing in Shanghai and Hong Kong has been set to be the largest initial public listing in the world. But that IPO was abruptly suspended in November, while the company faces regulatory scrutiny.
EY Asia Pacific IPO leader Ringo Choi told CNBC that the strength of Chinese companies on the list demonstrates the importance of the continent’s economy, as well as its ability to affect the performance of the stock exchange.
“That’s why every market is trying to attract these companies or businesses from the continent to go public there,” said Choi.
Still, the potential market returns for listing on the domestic market are likely to be an attractive proposition for mainland China companies, he said.
The EY survey showed that the first day rate of return for IPOs in 2020 reaching 187% for the Shanghai Stock Exchange’s Nasdaq-style STAR market, against 44% for the Shanghai motherboard.
By comparison, Snowflake – the largest software IPO of all time and the largest non-continental 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 .