Fri, Mar 15, 2019 - Page 11 News List

China ‘may lead’ IPOs by 2030 as access improves

EMERGING MARKETS:Liquidity is still the main concern among firms looking for an IPO location, but ecosystems and investor base size would become less important

By Crystal Hsu  /  Staff reporter

China might have the highest number of initial public offerings (IPOs) in 2030 as global companies have easier access to domestic investors and stock exchanges in emerging markets, international consultancy PricewaterhouseCoopers LLP (PwC) said on Monday.

Although stock markets in developed economies continue to be favored for listings, their lead over bourses in emerging markets has narrowed since the previous survey of global executives in 2011, PwC said in a report, which aims to explore the changing dynamics in global equity markets.

The dominance of the New York Stock Exchange, the NASDAQ, the London Stock Exchange and the Hong Kong Stock Exchange is not as pronounced as before, with Indian exchanges, the Shanghai Stock Exchange and Brazil’s B3 exchange moving up the ranks in recognition of their growing maturity, it said.

In 2030, India might trail China in the number of IPOs, followed by the US, Brazil and the UK, as Chinese and Indian companies are expected to dominate new issues, the report said.

That is because technology companies have featured strongly in IPO activity in the past few years and the trend would last, it said.

The technology sector continues to generate strong demand for equity in public markets, intensifying the competition between exchanges to attract “unicorns” and “new economy” companies, it added.

Competition would be particularly evident between the US and China, including Hong Kong, PwC said.

Chinese authorities have endorsed a depositary receipts scheme, which would allow local investors to hold a form of shares in firms listed abroad, although the scheme is currently available only to the largest companies.

Liquidity remains the top concern when firms choose a listing location, the report said, adding that executives also assign great importance to valuations and listing costs.

By contrast, stock market ecosystems and size of investor bases have become less important to participants, it said.

Companies have more options for raising capital, with the availability of public and private financing routes in different markets, it added.

The challenge for the exchanges is adapting to the changing landscape, competing while collaborating with each other and complementing other financing alternatives to support the provision of capital across the world, the report said.

The public equity markets remain the natural destination for many companies and can play a vital role in the healthy functioning of the global economy, it said.

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