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Mainland China and Hong Kong 2020 mid-year review: IPOs and other market trends

Mainland China and Hong Kong 2020 mid-year review

KPMG’s analysis and review of the mainland China and Hong Kong IPO markets in 2020 H1

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With new economy listings seen as key driver, Hong Kong proved more resilient than most bourses globally as overall market sentiment in the first half of the year was affected by the COVID-19 pandemic and economic concerns, according to KPMG analysis. Closely trailing NASDAQ, the Shanghai Stock Exchange came second in funds raised, backed by sizeable listings and the STAR Market’s continuing popularity.

KPMG’s latest analysis finds that proceeds from global IPOs in the first half of 2020 decreased by 8 percent to USD 68.8 billion compared with the same period last year, mostly due to a decline in the funds raised in major stock exchanges in the US and Europe. The showing was partly offset by an increase in fundraising in the Asia market, especially the Shanghai Stock Exchange.

Nevertheless, mainland China and Hong Kong held firm as key contributors. By the end of June, the Shanghai Stock Exchange and Shenzhen Stock Exchange are expected to record a total of 124 new listings, for a total of RMB 141.7 billion. This will mark an increase of 135 percent in the A-share market in terms of funds raised compared with the same period last year.

In Hong Kong, the TMT sector dominated fundraising in Hong Kong, supported by sizeable secondary listings from NetEase and JD.com, both US listed, China-based companies that raised a total of HKD 54.4 billion, representing over 62 percent of the total funds raised for the year. Their listings follow the ‘homecoming’ success of Alibaba’s secondary listing in Hong Kong last year.

For the rest of 2020, global market sentiment is expected to continue to be affected by economic uncertainty, which could affect short term access to IPO funds. However, Hong Kong is expected to hold steady as a high-ranking global IPO market, and the homecoming of China-based companies and the healthcare/life sciences sector are likely to continue as key market drivers.

© 2020 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in China, KPMG, a Macau partnership and KPMG, a Hong Kong partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited  ("KPMG International"), a private English company limited by guarantee. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

 

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