The number of stock market listings in Greater China fell sharply in the first quarter of the year but still outperformed other global markets, data from consultancy EY showed.
Greater China saw a 28% drop in the number of IPOs overall, although IPO activity in Hong Kong was slower compared to mainland China.
“Hong Kong has seen significantly slower IPO activity due to recent market volatility, a severe outbreak of Omicron cases and a relatively larger drop in local stock market indexes,” EY said in a report.
Hong Kong had just 12 IPOs, down over 60% year-on-year.
Chinese tech stocks have tumbled over the past year, hit by China’s regulatory crackdown and ongoing tensions with the US at the same interval.
“While mainland China also saw a slight decline in transaction numbers, revenue increased [year-on-year] due to hosting three of the seven mega IPOs in Q1 2022,” the company said.
While IPOs declined, overall China listing proceeds increased slightly — up 2% year over year, or $30.1 billion.
The decline in listing activity in China and Hong Kong followed a similar trend in the rest of Asia-Pacific, where IPOs also fell — but not as sharply, at 16% year over year. Asia-Pacific IPO proceeds increased 18%.
“Sudden reversal” from record highs last year
Asia-Pacific’s decline was less sharp compared to global listings — with a 37% year-over-year decline in the first quarter, or 321 listings. Global IPOs brought in $54.4 billion in revenue from January through March this year, down 51% over the same period.
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The global slump was a reversal from record highs in 2021 of 2,436 IPOs, according to EY.
“The sudden reversal can be attributed to a number of issues,” EY said. These include rising geopolitical tensions, stock market volatility, and corrections in overvalued stocks from recent IPOs.
EY also attributed the decline to growing concerns about rising commodity and energy prices, the impact of inflation and potential rate hikes; and the “COVID-19 pandemic risk that continues to impede a full global economic recovery.”
Consistent with the sharp drop in global IPO activity, there has also been a “significant” drop in SPAC IPOs – the public listing for special purpose acquisition companies.
Mega listings, which EY says have revenues of more than $1 billion, also declined. It said a number of IPOs were also postponed due to “market uncertainty and instability.”
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