SHANGHAI — The number of initial public offerings on the Shanghai and Shenzhen bourses is expected to almost double this year compared to 2015, according to a new report from PricewaterhouseCoopers.
The auditor estimated that the number of IPOs on the Mainland markets will grow to 400 from 219 in 2015, raising between 250 billion yuan, or $38.32 billion, to 300 billion yuan, or $45.98 billion. Mainland China may compete with Hong Kong and the United States to become the largest global market for funds raised through new listings, according to the report. Last year’s IPOs in China generated 158.6 billion yuan, $24.31 billion.
The positive forecast implies that current market fluctuations will not negatively impact the IPO market. Pwc stated that despite uncertainties in the global market last year, China’s economy grew steadily under “new normal” conditions. Pwc said it expects the trend to continue this year, with IPO activities steadily accelerating on a monthly basis.
The report predicts that small and medium-sized companies, dominated by industrial products, information technology, financial services, retail and consumer products sectors, will drive new listings.
“Several policies will be implemented formally in 2016, which will have a profound impact on the IPO market including registration-based IPO system and launch of the Strategic Emerging Industries Board,” said Frank Lyn, Pwc China and Hong Kong Markets Leader.
The registration-based IPO system will enhance information disclosures to ensure that issuers and intermediaries take responsibility. This is expected to increase transparency and the value of companies, while further opening up the market, according to Pwc.
The upcoming Strategic Emerging Industries Board will also play a part in attracting companies planning to go public to the Mainland by alleviating some concerns relating to financial conditions and profit requirements.
Pwc surveyed emerging enterprises and potential IPO applicants and found 80 percent of attendees were planning to go public in the Chinese capital market. Their bourse of choice was the Strategic Emerging Industries Board.