More Chinese firms shun U.S. bourses, seek home listings
The number and value of initial public offerings by Chinese companies in overseas markets have plummeted this year, but conversely figures for firms seeking a domestic listing have soared.
Data from Bloomberg showed that Chinese companies announced just 14 overseas listings worth a combined $666 million, a 98 percent fall from $29 billion in 2014－both the lowest total number and lowest value in four years.
The results showed that as well as a huge number of new listings planned at home, there were a record number of Chinese firms delisting in the United States and seeking to relist at home.
The latest plan to relocate its shares is by Trina Solar Ltd, which said on Monday that its chairman and founder Gao Jifan had offered to take the company private and then list in China, bringing the total number of such proposals to 38, five of which have already been completed.
KPMG predicted that as Chinese mainland bourses become more market-oriented, particularly with the launch soon of a registration-based IPO system, domestic companies are more likely to choose to list in Shanghai and Shenzhen.
That new mechanism will lower the listing threshold, simplify the process and emphasize financial disclosure, and is seen as one of the most important steps to reform China's capital markets.
Official figures showed $17 billion worth of funds was raised from IPOs at the Shanghai and Shenzhen bourses this year, a 33 percent year-on-year increase, even with a four-month suspension in listings, which ended November.
Separate data from PricewaterhouseCoopers showed that in the first half of the year, mainland bourses registered 187 IPOs, worth 146.1 billion yuan, a 260 percent year-on-year growth in deal numbers and 314 percent year-on-year increase in value, both of which topped the world rankings.
KPMG forecast that the Shanghai Stock Exchange alone will have seen 89 IPOs by the end of 2015, triple the number of last year, and worth 108 billion yuan, to become the world's fourth-largest IPO market.
Louis Lau Tai-cheong, a partner at KPMG China's capital markets group, said Chinese mainland bourses are quickly becoming more market-oriented with policymakers having taken significant measures to become more transparent, better protected, and better connected to global markets.
"Although it takes time for these measures to make an impact on the capital market, we expect they will further accelerate development of the A-share market," said Lau.
Analysts also said that the Hong Kong Stock Exchange has continued to be an important platform for IPOs by mainland companies, particularly for those in financial services, including brokerages, banks and insurers.
They said the planned shift to a registration-based system for IPOs, from the current approval-based mechanism, however, would be the most important measure yet made by regulators.
Liu Chenjie, a researcher with Beijing Gao Hua Securities Ltd, said the proposed Shenzhen-Hong Kong Stock Connect would be the other most-significant moment next year.
According to a separate research note by EY, meanwhile, other fundraising methods, especially exits from the market through merger or acquisition, could have an influential effect on numbers in 2016.
"Global merger and acquisition deals surged this year, showing those have become popular fundraising alternatives for enterprises," the note said.
