More than 70 corporations have gone public on China's stock market this year, according to tallies. Most of the newly listed companies are highly technology-intensive, and funds have flowed into the field of "hardcore technology" (advanced technologies with high barriers to entry, hereafter hard tech). Experts said the capital-market reforms the Chinese government has carried out in recent years are bearing fruit.
According to local market research firm Wind on the 2nd, a total of 76 corporations were listed on China's A-share (for domestic investors) market from January to September this year. That is eight more than the same period a year earlier. Of these, 36 listed on the STAR Market (Ke Chuang Ban), known as China's Nasdaq, and the ChiNext board. They raised a total of 75 billion yuan (about 14.739 trillion won), surpassing the previous year's annual total (67.4 billion yuan, about 13.2454 trillion won). By industry, there were many listings in power equipment, automobiles, electronics, and machinery and equipment. Power equipment companies were the most with 16, while automobiles and electronics each had 11, and machinery and equipment had nine.
Liu Xiangdong, chief analyst at Dongyuan Investment, told the local outlet Securities Daily that "both the number of A-share initial public offerings (IPOs) and the amount raised have increased this year, energizing the market," adding, "In particular, as the share of hard tech corporations among new listings has risen, the capital market is strategically supporting the field of technological innovation, which will strengthen industries' autonomy and control."
Wu Qing, chair of the China Securities Regulatory Commission (CSRC), also said at a press conference on the 22nd of last month that "more than 90% of recently listed corporations are science and technology corporations or highly technology-intensive corporations," noting that "the capital market's support for science and technology is accelerating." According to Securities Daily, the market capitalization share of the science and technology sector in China's A-share market exceeds 25% of the total. That is a higher share than the combined total of the banking, nonbank financial, and real estate sectors.
China's IPO boom appears to have been influenced by the implementation of the government's stock issuance registration system. The Chinese government revised the law to allow any corporations that meet certain requirements to issue shares. From 2020 to 2023, it sequentially applied the registration system starting with the STAR Market and ChiNext. The registration system has now been expanded to the Beijing, Shanghai, and Shenzhen exchanges. As a result, the efficiency of stock issuance operations, including listings, has improved and market transparency has been strengthened.
Tian Lihui, a finance professor at Nankai University, said, "Since the registration reform, the review process has become more transparent and efficient, making it easier for high-quality science and technology corporations to enter the capital market. As a result, capital is rapidly converging on the field of technological innovation."
However, there are also many withdrawn IPOs. According to Wind, a total of 186 entities applied for listings through September this year. That is about double the previous year's annual tally (98), but among them, 83 corporations failed to meet new share issuance requirements and withdrew their IPOs. Some were forced to withdraw due to insufficient listing suitability, some gave up because of deteriorating results, and others halted the process after their technological capabilities were questioned.
Chief analyst Liu said, "While hard tech corporations are gaining a foothold in the capital market on real merit, corporations with problems or so-called 'fake tech' are being pushed out by regulators," proposing the following solutions: ▲ clarify the criteria for determining science and technology corporations ▲ strengthen supervision of information disclosure ▲ strengthen the responsibilities of lead underwriters and accounting firms ▲ introduce a third-party expert review system.