Shanghai is expected to become the largest Initial Public Offering (IPO) market in the world this year.
Quoted from CNN.com, if the Shanghai Composite Index becomes the largest market, it could help reduce Beijing’s dependence on foreign financial markets.
Based on Dealogic’s research, stock exchanges in the Chinese region, namely Hong Kong, Shanghai and Shenzen, have raised $123 billion. This amount is through hundreds of companies that have just listed on the stock exchange this year.
Ant Group raised $34 billion from their IPOs in Hong Kong and Shanghai , thus it made big amount. This IPO is the largest IPO in the world.
The combined stock market of Hong Kong and China
The combined strength of the Hong Kong stock market and the Chinese region has made the region as a popular IPO destination. The IPO valuation in this area has almost shifted the New York Stock Exchange and Nasdaq.
This year, the condition is getting strengthen. The corona pandemic has not made the Shanghai stock market shrink. The IPO value that Shanghai succeeded in pocketing will increase to $61 billion in 2020.
This number is three times bigger than the value of Shanghai’s IPO in 2019. Shanghai has so much momentum and it will make them become the first rank in the world for this year’s IPO.
“We fully expect the Shanghai Stock Exchange to secure a ‘crown’ in the global ranking (IPO venue) by the end of 2020,” said Edward Au, Deloitte China Southern Regional Managing Partner.
Hong Kong is likely as second rank overall
The main factor behind China’s IPO boom is Beijing’s desire to reduce its dependence on foreign money and technology, and expand the amount of oversight it has on valuable businesses.
Historically, Shanghai-listed companies were major state-owned banks, energy and real estate companies. Other big Chinese businesses, particularly those in technology, typically turn to Wall Street or Hong Kong. In order to find investors because of mainland China’s listing barriers.
This includes a ban on dual class stock, which gives company executives more power.
China’s deteriorating relations with the United States have prompted more Chinese firms to choose their home country over New York.