Chinese regulators open path to IPO revival in mainland market | USAEMALL.com

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Chinese financial authorities have told some companies and advisers that they can begin the process of launching mainland initial public offerings once more, in an early sign of a rebound in listings in the world’s second-largest economy.

Authorities have informed groups in the technology, advanced manufacturing and consumer sectors in the past few weeks that they can file IPO paperwork, according to investors and advisers familiar with the mainland listings regime.

The move appears to mark a shift in the government’s approach to listings, after its previous concerns that IPOs could further weigh on a stock market that, until autumn last year, had been falling for years.

“We feel that the regulators’ attitude towards A share IPOs as well as share placement is more open compared to [the] past two years. They are also approaching some quality issuer candidates to ask them to prepare to file,” said a person familiar with the listings process.

Mainland Chinese IPOs plummeted in value by 80 per cent in 2024 to just under $9bn, according to Dealogic data. Only 96 companies went public during the year, down 60 per cent from 2023.

The drought in listings came after years of declining share prices and fragile investor confidence as foreigners fled the stock market. However, stocks rebounded sharply in September after policymakers unveiled stimulus measures targeting the stock market and the economy.

The offerings that went ahead last year in mainland China were mainly mid-cap companies and real estate investment trusts. Swiss agricultural chemicals company Syngenta, which had planned to go public on the Shanghai exchange, cancelled its $9bn listing last year “after careful consideration of [the] industry environment and the company’s own development strategy”. Some companies instead launched secondary listings in Hong Kong, which had been preparing for a listings revival this year.

One banker who received the guidance said the main financial regulator, the China Securities Regulatory Commission, would consider main board IPO applications from companies in consumer industries if they were among the top three in their speciality, with an ideal revenue base of more than Rmb1bn ($137.7mn) or profits of more than Rmb500mn.

“This [has] relatively eased from last year,” he said. “Last year, applications [from consumption companies] could not be accepted at all.”

Among companies to have already filed to go public in Shanghai is GoPro competitor Insta360.

The shift in what is colloquially known as window guidance comes as Beijing attempts to boost the flagging Chinese economy, encourage higher consumption and prepare for what could be an intense period of trade tensions with the US.

It also comes at a time when share prices are getting more support. Last year targeted buybacks reached a record high, encouraged by Beijing. While the CSI 300 is flat this year, the index has climbed about 12 per cent over the past year, while Hong Kong’s Hang Seng index is up 42 per cent.

According to people familiar with the drive to encourage IPOs, authorities are primarily targeting technology and advanced manufacturing companies, part of the so-called new productive industries that Beijing has supported in recent years.

Some discretionary consumer companies rated as yellow on the traffic light system used by authorities to manage listing candidates depending on how favoured they are have also been told they can go ahead to list. This is another sign Beijing aims to boost individual consumption this year.

Analysts and bankers said regulators had previously prioritised improving secondary market liquidity and buoying share prices over listings, which Beijing believes could add further downward pressure to the market.

One investment banker told the Financial Times the mentality shift began last September, when the government launched a blitz of stimulus policies and authorities began to focus more on the stock market.

Additional reporting by Eleanor Olcott in Beijing