- Nasdaq-style Star board propels Shanghai Stock Exchange to fourth biggest IPO market in 2019
- Flexible listing requirement and trading rules expected to draw more Chinese tech companies, including those already listed on other offshore exchanges
China's Star Market, the Nasdaq-style tech board launched this year, will extend its stellar IPO performance into 2020, with up to 150 firms likely to raise up to 160 billion (US$22.9 billion) yuan, according to Deloitte China.
A total of 68 companies have raised 72.7 billion yuan on the Shanghai Stock Exchange's Science and Technology Innovation Board since it opened in July.
"The Star board has revitalised China's IPO market. It has successfully attracted a lot of companies, particularly from the telecom, media and technology sector," said Dick Kay, co-leader at Deloitte China's National Public Offering Group.
Excluding the Star Market, Deloitte China expects 140 to 170 issuers to raise 180 billion yuan to 220 billion yuan next year on the mainland's two main exchanges in Shanghai and Shenzhen.
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Overall listings on these two exchanges is expected to reach 196 by the year-end, with companies raising 246.5 billion yuan. Funds raised by the Star Market will account for 29 per cent of the total.
"Overall China's IPO market has shown stellar performance this year, and increasingly we are seeing more Hong Kong listed Chinese companies seeking a secondary listing back at their home exchanges in China, including the Star board," said Edward Au, co-leader at Deloitte China's National Public Offering Group.
First mooted by President Xi Jinping in November 2018, the Star Market represents the Chinese government's efforts in expediting capital market reforms while helping hi-tech start-ups to tap funds. The flexible listing requirements and trading restrictions have also helped to attract a slew of IPOs in just six months. The Star Market allows pre-profit tech firms to raise funds through IPOs and there is no upper limit for price gains of such companies' shares on the first trading day.
As of December 9, 80 companies have applied to list on the Star Market. Among them is China Resources Microelectronic, a chip maker that was once listed on the Hong Kong stock exchange until it was privatised in 2011 by parent and state-owned conglomerate China Resources Group.
The Shanghai exchange ranks fourth in the IPO table this year, with 120 listings raising HK$205.3 billion.
Hong Kong stock exchange, meanwhile, is expected to top charts, with the total funds raised set to reach HK$311.8 billion from 161 new listings by the end of this year.
Au however said that he still sees China's domestic stock market as attractive despite strong competition from its neighbour.
"Globally, the overall loosening monetary stance means that investors will continue to allocate their capital to Asia, and Chinese companies will remain a bright spot due to their high growth (potential)," Au said.
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