The scrum of companies waiting to list reflects the dynamism and scale of Chinese companies, he said. They absolutely aim to grow bigger and better, and we should strongly support that.”
Chinese companies have been actively seeking overseas listings since the implementation of the overseas application system on March 31 last year. As of Tuesday, 158 companies have obtained approvals for overseas listings, Fang said. Among these, 85 are for Hong Kong offerings and 73 are for the United States.
The regulator’s support is welcome as it will accelerate the listing process and allow “attractive and very compelling” companies to get out of the pipeline and onto the board, Kevin Sneader, president of Goldman Sachs Asia-Pacific, said at the forum.
The gathering pace of potential listings is already being felt within law firms handling such matters. “It’s very clear that the CSRC is speeding up approvals for overseas listings, as suggested by the numbers,” said Yuyi Yang, partner at law firm Jingtian Gongcheng in Shanghai. “Our pipeline is growing at a healthy speed.”
The CSRC said in March that it would control the quality of declarations made by companies seeking to raise capital from the public and strictly prohibit the “blind pursuit” of IPOs and “excessive financing for profit”.
In total, IPOs on the A-share market plunged 75 per cent to 44 during the first half of 2024, while fundraising tumbled 84 per cent to 32.9 billion yuan (US$4.5 billion), according to data from EY. Industrials, technology and materials companies dominated, accounting for nearly 90 per cent of both deal volume and proceeds.
Although the approval process for A-share IPOs has improved gradually, its slow speed indicates that even with potential future relaxations in approvals, the number of IPOs will decline compared with previous years, Yang said.
“We’re clearly seeing offshore listings picking up, especially red-chip companies looking to reroute to Hong Kong” given the current market environment, said Jaycen Liao, senior partner in the capital markets department at Zhong Lun Law Firm in Hong Kong.
For mainland companies, the process of getting listed in Hong Kong is more familiar and offers higher certainty, making the city the top choice, he added.
The momentum of Hong Kong’s IPOs has picked up in recent months, which bodes well for the exchange as it claws its way back up in the rankings of the world’s top spots for fundraising, the bourse’s boss said.
The city was the world’s top IPO destination seven times between 2009 and 2019, but is expected to finish in 10th place for the first half, according to KPMG.