PwC forecasts record IPOs

Initial public offerings on the Chinese mainland bourses are likely to set a record this year, according to the latest forecast by PwC.

The Hong Kong stock exchange is expected to draw more technology enterprises and those previously listed in the United States, the global consultancy said in its forecast.

PwC also projected that the A-share market will likely see between 580 and 690 IPOs this year, which could raise 560 billion yuan ($87.88 billion) to 635 billion yuan.

The science and technology sector will continue to lead the chart, with Shenzhen's ChiNext and Shanghai STAR Market set to attract the most newly listed companies: 220 to 250, and 180 to 200, respectively.

Thomas Leung, PwC China Markets managing partner, attributed the rosy forecast to the expected rollout of a comprehensive registration-based IPO system this year.

"We anticipate more strides in reform and opening-up this year," Leung said. "The upcoming comprehensive registration system and the ever-expanding investment channels open to international investors will create a more attractive trading environment to further improve A-share connectivity."

For the Hong Kong bourse, key IPO drivers are companies engaged in the so-called New Economy comprising technology and internet-based services, as well as public companies (such as those already traded in the US) seeking dual listing in Hong Kong.

"We forecast about 10 to 15 Chinese mainland companies listed in the US to float their shares in Hong Kong, with financing amount somewhere between HK$100 billion ($12.8 billion) to HK$150 billion," said Benson Wong, PwC Hong Kong entrepreneur group leader.

As Asia's biggest biotech fundraising hub, Hong Kong remains a draw for biotech startups, with Wong projecting 20 such firms will likely list this year.

Meanwhile, stronger demand from investors and stricter regulatory requirements will drive more listings from sectors like renewable energy, electric vehicles and other environmental, social and governance-related businesses.

"Generally, we remain optimistic about the prospects of the IPO market in Hong Kong, with a projection of 120 IPOs and total funds raised between HK$350 billion to HK$400 billion," he said.

PwC studied last year's IPOs in China, which set records in terms of both volume and value. The number of IPOs rose 25 percent year-on-year to 493, while total funds raised increased by 17 percent to nearly 548 billion yuan.

The Shanghai Stock Exchange was one of the world's top three IPO markets in 2021, with total fundraising of 375 billion yuan for 249 listings, trailing only behind Nasdaq in the US.

In 2021, 73 percent of A-share IPOs were made through the registration system, accounting for nearly two-thirds of funds raised. The Beijing Stock Exchange, which debuted on Nov 15, saw 11 new listings with fundraising of 2 billion yuan.

In the A-share market, the number of ESG-related IPOs increased to 47 in 2021, or 10 percent of the total. This compared with 25 ESG-related IPOs representing 6 percent of the total in 2020.

"The multilevel A-share market will provide a more efficient and dynamic financing platform for businesses of different types and sizes that may be at different stages of development," said Jean Sun, a partner at PwC China. "This will help develop China's real economy, particularly in terms of science and technology."

hewei@chinadaily.com.cn