A-share market shows resilience amid uncertainties

While 2022 IPOs were subdued globally due to geopolitical tensions and multiple market uncertainties hampering economic growth, the IPO market remained in the A-share market last year as the country’s technology-focused boards become more vital. to be started.

As calculated by leading consulting firm KPMG, the number of IPO cases and total funding raised globally declined by 50 percent and 60 percent year-over-year, respectively, in 2022. IPO funding raised on the two major exchanges in the United States, the New York Stock Exchange and Nasdaq fell more than 90 percent annually.

But the A-share market showed its resilience amid global gloom. While the number of IPO cases fell 15 percent year over year to 416 in 2022, total funding rose 9 percent to 584.9 billion yuan ($87.03 billion), renewing the record set in 2021, it said. professional service provider EY.

Deepened capital market reforms, promotion of the registration-based IPO mechanism and the establishment of a multi-tiered capital market had contributed to the record high returns in the A-share market in 2022 as the global economy faced several challenges, said Zhao Haizhou, the leader in offering A-shares in the eastern region for the capital markets services group at Deloitte.

It should be noted that IPO proceeds in the STAR market on the Shanghai Stock Exchange, the board aimed at nurturing “hard technology” companies, such as chipmakers, biopharmaceuticals and artificial technology companies, accounted for 40 percent of the full-year IPO fundraising in the A-share market in 2022, as per EY’s calculation. It’s the first time the STAR Market has overtaken the A-share main board, where large caps are listed in terms of IPO funding.

In addition, of the 10 largest IPOs recorded on the A-share market last year as measured by yield, seven were listed on the STAR market.

Meanwhile, the number of IPO cases recorded on the ChiNext in Shenzhen, Guangdong Province, the board to boost integration between traditional industries and new technologies and new business models, reached 150 by the end of 2022, according to the latest data from market follower Wind Info, overtaking all other boards in the A-share market.

According to Felix Fei, EY Assurance partner, the development of “hard technology”, which has become an important national strategy in China, has led to structural changes in the A-share market in recent years. While financial services companies used to top the list of IPO returns, their leadership position has been displaced by technology, media, telecoms, biopharmaceuticals and healthcare companies. Industrial companies with core technologies have also caught up in IPO financing.

Advanced manufacturing, which is expected to highlight China’s economic growth in 2023, will see more IPOs successfully announced this year, Fei said. Companies using special and advanced technologies to produce new and unique products, which are also in line with the country’s strategic development path, will also boost IPO activity on the one-year-old Beijing Stock Exchange, which was launched to promote technologically advanced small and medium-sized enterprises.

While the BSE successfully floated 75 new companies on the stock exchange in 2022, with total funding of 14.9 billion yuan, Deloitte estimates that up to 120 companies will announce their IPOs on the BSE in 2023, with total proceeds of 24 billion yuan .

The STAR market in Shanghai is expected to see 120 to 140 new listings in 2023, with total fundraising estimated between 305 billion yuan and 340 billion yuan. The ChiNext is likely to accommodate 150 to 170 IPOs in 2023, with estimated proceeds of more than 210 billion yuan, according to Deloitte.