The flag (right) of the Hong Kong Exchanges and Clearing Limited (HKEX) is hoisted next to Chinese national flag (center) in the Hong Kong Special Administrative Region on Aug 16, 2016.
(ANTHONY WALLACE / AFP)
HONG KONG – The Chinese mainland and Hong Kong will continue to be the preferred listing destinations for Chinese mainland technology, media and telecommunications (TMT) firms in the second half of 2022, global accounting firm PwC said.
The stable environment ensured by government support measures will further drive the recovery of the domestic economy and capital markets, PwC added.
The total number of initial public offerings by Chinese mainland TMT companies in the first half of this year was 68, down from 74 in the second half of 2021. Total financing rebounded to about 160.4 billion yuan ($23.62 billion) from 150.7 billion yuan in the second half of last year, benefiting mainly from the return of China Mobile Ltd to the A-share market and the return of KE Holdings Inc to the Hong Kong Stock Market.
Among the TMT companies listed in the mainland, 30 companies listed on the Shanghai Stock Exchange’s STAR Market, accounting for 44 percent, while 19 companies, or 28 percent of the overall number, chose the ChiNext Market in Shenzhen
The State-owned communications company’s domestic listing on the main board raised about 52 billion yuan, making it the largest TMT IPO in the first half of the year.
Among the TMT companies listed in the mainland, 30 companies listed on the Shanghai Stock Exchange’s STAR Market, accounting for 44 percent, while 19 companies, or 28 percent of the overall number, chose the ChiNext Market in Shenzhen.
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Over the same period, 13 percent of Chinese mainland TMT companies chose to list in Hong Kong and overseas, with a total of nine companies receiving about 4.7 billion yuan in financing, accounting for 3 percent of the total financing raised.
“Driven by the Shanghai Stock Exchange’s STAR Market and the Shenzhen bourse’s ChiNext board, Chinese TMT enterprises remained relatively active in the capital market in the first half of 2022,” said Gao Jianbin, Chinese mainland TMT industry leader for PwC.
Gao said he believes that domestic TMT enterprises will still prefer the Chinese mainland and Hong Kong for primary listings. “The implementation of the State Council’s 33 stabilization policies will further boost the recovery of the Chinese economy as well as the capital market in the second half of 2022,” he said.
In April and May, the US Securities and Exchange Commission placed more than 100 US-listed Chinese companies on “pre-delisting list”.
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Several large State-owned enterprises recently announced the delisting of their American Depositary Receipts from the New York Stock Exchange, including China Life Insurance Co Ltd, China National Petroleum Corp, and China Petroleum & Chemical Corp.
Meanwhile, the China Securities Regulatory Commission initiated the consultation for revising the terms related to cross-border regulatory cooperation in April, including confidentiality rules for overseas listing.
Wilson Chow, PwC Global TMT industry leader, said, “In the first half of 2022, China Mobile’s return to A-shares, Alibaba seeking a primary listing in Hong Kong, and five of China’s largest State-owned companies’ plans to delist from US exchanges paved the way for Chinese Concept Stocks listing in Hong Kong, and act as positive new signals for Chinese Concept Stock enterprises.”
Looking forward, Chow said he believes that the return of technologically innovative TMT companies and Chinese Concept Stocks will continue to be the main driving force for the domestic capital market in the second half of 2022.
“With the support of a number of policies to stimulate economic growth, as well as the improvement of the registration system, the domestic capital market is expected to continue to grow despite pressure to become a highlight in the global market,” Chow said.