Host of IPOs to keep Chinese bourses busy

China's expanded registration-based IPO mechanism is expected to fuel listings on the domestic market, especially in the telecommunications, technology, and media (TMT) sector, according to a report by consulting firm PwC.

Domestic bourses dominated initial public offerings in China's TMT sector in the second half of 2022, with 124 IPOs and compared with 69 in the first half of 2022.

PwC's China TMT Industry Managing Partner Gao Jianbin estimated that the registration-based IPO mechanism will inject further momentum and increase the number of IPOs on the domestic market in the coming year.

The China Securities Regulatory Commission said earlier this month that draft guidelines for a registration-based IPO system would be expanded to domestic main boards.

In the second half of last year, Shanghai's STAR Market and Shenzhen's ChiNext board attracted a combined 74 IPOs with total proceeds of 1.14 billion yuan (US$167 million), accounting for almost 86 percent of the total revenues from listings.

The total amount of proceeds raised in the second half of last year increased significantly to about 133.5 billion yuan from 108.4 billion yuan in the first half.

According to Gao, the overall upbeat economic and financing environment would be more appealing for startup companies this year, with an increasing number of IPOs and higher efficiency expected.

More listing options and a lower listing threshold for companies in the pre-commercial or early commercial stage would result in larger IPO sizes and a better valuation, Gao said.

Artificial intelligence companies that have increased their commercialization revenue and received additional investor attention as a result of the recent frenzy over AI-generated content may benefit from the registration system with larger financing sizes and higher market capitalization.

In November, the Hong Kong Stock Exchange also suggested a draft scheme to lower the revenue barrier for hard-tech companies, which is expected to be especially appealing to technological unicorns and investors specializing in these industries.