The number of public listings in China dropped significantly in the first quarter of the year, but still outperformed other global markets, data from consulting firm EY shows.
Overall, initial public offerings fell 28%, although IPO activity in Hong Kong was slower than in mainland China.
“Hong Kong saw significantly slower IPO activity due to recent market volatility, the severe outbreak of the Omicron affair and the relatively larger decline in local stock market indices.” , EY said in a report.
Hong Kong only had 12 IPOs, down more than 60% from a year ago.
Chinese tech stocks have fallen sharply over the past year due to China’s Regulatory Suppression and ongoing tension with the US The Hang Seng Tech Index is down about 44% from a year ago, while the benchmark Hang Seng Index fell by about 22% during the same period.
“While Mainland China also had a small decrease in the number of transactions, the proceeds increased [year-on-year] due to hold three of the seven major IPOs in the first quarter of 2022,” the company said.
While the number of IPOs has decreased, proceeds from larger listings in China overall have increased slightly – 2% from a year ago, or $30.1 billion.
The turmoil in listing activity in China and Hong Kong follows a similar trend in the rest of Asia-Pacific, where IPOs have also fallen – but not by as much, at 16%. annual. IPO revenue in Asia-Pacific increased by 18%.
‘Sudden reversal’ from last year’s record high
The drop in Asia-Pacific was less severe than in IPOs globally – with a 37% drop in the first quarter from a year ago, or 321 listings. Global IPOs raised $54.4 billion in proceeds between January and March of this year, down 51% in the same period.
The overall decline worldwide is a change from a record high in 2021 with 2,436 IPOs, according to EY.
“A sudden reversal can be due to a variety of problems,” EY said. These include rising geopolitical tensions, stock market volatility, as well as price corrections of overvalued stocks from recent IPOs.
EY also attributed the decline to growing concerns about rising commodity and energy prices, the impact of inflation and the possibility of interest rate hikes; as well as “the risk of the COVID-19 pandemic continuing to hold back the global economic recovery.”
Along with the sharp decline in global IPO activity, there was also a “significant” drop in the IPOs of SPACs – public listings for special-purpose acquirers.
Mega listings, which EY identified as having more than $1 billion in proceeds, also fell. It said there were also a number of IPO launches that were postponed due to “market uncertainty and instability.”
