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Chinese IPOs - statistics & facts

A company's initial public offering (IPO) is an important means of raising more funds for the company's further development. Besides, an IPO makes it possible for the broader public market to evaluate a company's performance and its value. Once a company is listed, it must comply with regulatory requirements and disclose its key information to the public regularly, which also helps to improve its corporate governance in turn. Chinese companies listed overseas also need to adjust themselves to international accounting standards.

Stock market history

The history of China's stock market is relatively short. The Shanghai and Shenzhen Stock Exchanges were established in 1990 and 1991 respectively. Since then, with the development of laws, regulations, and financial services, the Chinese stock market has shown rapid development. As of the end of 2020, more than four thousand companies were listed on the Shanghai and Shenzhen stock exchanges. In 2017, Morgan Stanley Capital International added China A-shares to its emerging market index. Along with the Hong Kong Stock Exchange, the Chinese Stock Exchanges in Shanghai and Shenzhen belong to the most important stock exchanges worldwide.

The rapid expansion of China's IPO market has also contributed to the growth of the global stock market. In 2019, Alibaba Group Holdings' Hong Kong IPO raised around 11.2 billion U.S. dollars, becoming the world’s second-largest IPO of that year. Due to the large scale of these IPOs, their performance will have an important impact on the trend of the stock market in China and overseas. At the same time, the listing of these companies can also help people understand the development of China's economy more comprehensively.

Increasing self-reliance

Due to different listing standards between different regions, many Chinese companies chose to go public overseas. Especially, the American and the Hong Kong financial markets were popular among Chinese enterprises, but for different reasons. Stock Exchanges in the United States stand out because of their large size and lower listing requirements. The Hong Kong Exchange’s advantage is its proximity to mainland China. The regulatory hurdles between these two regions are significantly lower than for markets outside of Greater China. Alibaba was the largest IPOs in the United States and JD.com the largest public offering in Hong Kong.

In recent years, the Chinese government has emphasized the development of the domestic stock market. On the background of the increasing size and significance of companies listed overseas, the exposure of these enterprises to the developments of overseas financial markets constitutes a risk to the economic stability in China. As a countermeasure, strengthening the domestic financial market became a crucial policy objective. One step towards that goal was the establishment of trading boards for start-ups at the two major bourses. The Shenzhen Stock Exchange the CHINEXT market and at the Shanghai Stock Exchange the Star 50 market are tailored towards upcoming enterprises.

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