Shanghai's Stock Exchange Leapfrogs To Top IPO Spot

Tom Burroughes

29 September 2020

The Shanghai Stock Exchange is expected to claim the top spot globally in terms of both initial public offering fundraising and number of listings year-to-date as at the end of the third quarter, with New York’s NASDAQ in second spot and Hong Kong in third, according to accountancy big-hitter .

As of 22 September, IPO proceeds in Shanghai’s market were $38.2 billion, $31.1 billion for the NASDAQ and $23.4 billion in the Hong Kong Exchange (HKEX); $21.7 billion for the New York Stock Exchange, and $10.5 billion at the Shenzhen Stock Exchange. A year ago over the same nine-month period, the NYSE was top, followed by NASDAQ, HKEX, Shanghai Stock Exchange and Shenzhen Stock Exchange, respectively.

"Despite global capital markets facing significant challenges fostered by COVID-19 and market uncertainty, total funds raised in 2020 are expected to increase by over 30 per cent by the end of Q3 compared with the same period last year, boosted by the A-share and Hong Kong IPO markets," Paul Lau, partner, head of capital markets, KPMG China, said.

IPOs are important liquidity events, minting new multi-millionaires or even billionaires, such as in headline-making cases of Chinese e-commerce giant Alibaba, or US social media group Facebook.

The KPMG report said that there was a “significantly” increasing number of US-listed China-based companies returning for secondary listings in Hong Kong, with a total of seven such listings together contributing approximately 48 per cent of the total funds raised year-to-date.

The prominence of Hong Kong may also give pause to commentators concerned that China’s new national security law crackdown on the jurisdiction would hurt the local economy, at least in certain ways.

Shanghai's STAR Market witnessed the IPO of Semiconductor Manufacturing International Corp, which raised $7.4 billion, followed by JD.com on the Hong Kong Stock Exchange ($4.4 billion) and Beijing-Shanghai High Speed Railway Co in Shanghai ($4.4 billion). The dual listing of Ant Group in Shanghai and Hong Kong is expected to give a further major boost to the two markets' performance in terms of funds raised in the next quarter.

This year marked the most active Q3 year-to-date period for the Chinese A-share market in terms of funds raised since 2011. The Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) are expected to record 294 new listings worth a combined RMB355.7 billion ($52.21 billion) by the end of the third quarter.

"IPOs in Hong Kong and mainland China will continue to be driven by new economy companies. As digital transformation has accelerated amid COVID-19, the demand for tech-enabled solutions in areas like telehealth, remote learning, drug development and logistics is growing. This is fuelling the need for innovative companies to raise funds especially in the TMT and life sciences sectors,” Irene Chu, partner, head of new economy and life sciences, Hong Kong, KPMG China, said.

(Editor's note: Even allowing for the ups and downs that can be caused by the listing of one major firm, it is worth noting that not one single European exchange, including the London Stock Exchange, featured in the top-five - either this year or last. European bourses have work to do in attracting business, and this speaks to a wider issue around wealth creation in Europe and the UK.)