U.S. media: Chinese companies accounted for nearly 40% of global IPO volume this year

Chinese companies have raised an unprecedented amount of money in initial public offerings at home and abroad, accounting for nearly 40 percent of the global IPO market, partly because the country was the first to overcome the epidemic, U.S. media said.

Funds raised by companies such as JD.com Health, a subsidiary of e-commerce giant JD.com Inc, helped push Chinese companies to raise a record $129 billion in ipos and secondary listings in 2020, according to data compiled by Bloomberg News.

Chinese companies listed on stock exchanges in the US, Hong Kong and the mainland accounted for 37 per cent of new listings globally this year. That is the highest share of global ipos since 2009, when the global financial crisis dented US activity.

Francesco Lavatelli, head of equity capital markets for Asia Pacific at jpmorgan, said: "China has clearly recovered the fastest among the world's major economies this year."

Frequent deals, particularly in the technology and healthcare sectors that have boomed during the epidemic, have reassured bankers earlier this year that IPO volumes were "drying up", the report said.

The report also said that fears of a decline in capital market activity had dissipated despite the continued spread of COVID-19. Companies affected by the COVID-19 lockdown are raising capital at record levels to shore up their balance sheets. On the other hand, central banks have flooded the economy with liquidity in response to the economic losses caused by COVID-19, and low interest rates have stimulated investor interest in new equity issues.

"It's not a good idea to put cash in a bank account and wait for a return," said Catalano Basolino, head of global banking for Asia Pacific at UBS. "It has really changed the way investors look at risk."

U.S. stock exchange ipos have also reportedly raised record amounts this year, totaling about $173 billion, not only from U.S. tech start-ups like Airbnb and Dordash, but also from Chinese electric car maker Xiaopeng Auto and online real estate brokerage Shell.

At home, China has accelerated reforms to its IPO market, allowing new shares to fluctuate more on a daily basis. Hong Kong eased rules on new economy share listings in 2018, opening the door for dual-class companies to list in the city.

Most of the Chinese companies that went public on a large scale this year have some technological element to them, the report said. Chip maker SMIC raised $7.5 billion in Its Shanghai listing in July, the largest by a Chinese company this year, followed by nasdaq-listed JD.com inc's secondary listing in Hong Kong in June, which raised about $4.5 billion.

Even at the end of the year, long queues and investor appetite for new listings show no sign of slowing. In a month when global stock markets have performed well, JD.com Health raised about $3.5 billion in Hong Kong, where its shares jumped 56% on their first day of trading. Since then, when pop Mart, a trendy toymaker, listed on the Hong Kong stock exchange, its shares jumped 79 per cent on the first day of trading.

"Investors are looking for opportunities for sustainable growth and there are three themes: technology, healthcare and China," says Uday Fultado, co-head of Asia equity capital markets at Citibank in Hong Kong.