Chinese companies are leading global stock offerings this year, with their issuance being driven by China’s easy monetary policies and uncertainty in accessing the offshore capital markets.
This year, Chinese firms raised $71.2 billion through initial public offerings (IPOs) in domestic as well as foreign markets, according to Refinitiv data.
While the number was lower than the $98.48 billion raised in 2021, it was still higher than American firms, with $17.3 billion, and European firms, with $16.4 billion.
The rise in Chinese IPOs comes amid businesses and dealmakers waiting for final rules from the Cyberspace Administration of China and the China Securities Regulatory Commission for regulating overseas listings, particularly those that manage data.
Mandy Zhu, Head of China Global Banking at UBS, said that the country’s domestic market was not impacted much by global volatilities, and that China had a loosening monetary policy and lower inflation environment, with a more resilient equity market value.
As central banks across the globe cope with rising inflation, China did not face much price pressure and saw interest rates being reduced.
IPO issuance this year was led by Shanghai United Imaging Healthcare Co Ltd, which raised $1.63 billion. Hygon Information Technology Co Ltd came second with $1.6 billion, followed by Jiangxi Jinko PV Material Co Ltd with $1.58 billion.
Although increasing volatility saw global investors leave riskier equity markets in recent months, markets in China remained quite resilient.
While global equity funds saw outflows of $144 billion since April, Chinese equity funds witnessed inflows of $21.3 billion, as per Refinitiv Lipper.
Still, Chinese firms’ overseas listings fell sharply in the same period, with data showing that while IPO issuances in China dropped 11%, Chinese listings in Europe and the US dropped 81% and 97%, respectively.
Analysts believe that this is due to concerns over COVID-19 lockdowns in China, growth worries, audit disputes going on with the US, and a lack of clarity regarding offshore listing rules.
Zhu added that Hong Kong acquired a robust IPO pipeline which is expected to witness a surge in issuance when the market recovers.