A new report from Ernst & Young (EY) points to continued robust growth in China’s A-share IPO’s in the first half of 2020, despite the expanding impacts of the COVID-19 pandemic.
According to the report global IPO activity was hard hit by the Novel Coronavirus in the first half of 2020, with 412 companies raising USD$66.7 billion in funds, for declines of 20% and 12% YoY respectively.
By contrast China’s A-share market is expected to see 120 IPO’s in the first half for a YoY increase of 88%, raising 139.9 billion yuan for a YoY rise of 132%.
The COVID-19 pandemic did not have a sizeable impact on China’s capital markets except in the month of March, when IPO activity saw a sizeable month-long decline.
Shanghai’s Star Market was a key-driver of A-share IPO activity, accounting for 39% of IPO volume and 37% of funds raised, as well as seeing 15 IPO’s during the months of February and March when the COVID-19 pandemic was its worst in China.
EY anticipates strong A-share IPO activity in the second half, especially on Shenzhen’s ChiNext board, for which the Shenzhen Stock Exchange will begin to accept new applications on 30 June.
As of 19 June 2020 a total of 632 companies were in the pipeline for A-share listing, with a new share approval rate of 93%. 194 of these applicants are for Shanghai’s Star Market.