(Yicai Global) Dec. 16 -- The Chinese mainland stock exchanges in Shanghai and Shenzhen are on track to raise the second and third largest amounts through initial public offerings in 2021, as the mainland logs a record number of listings and the most financing raised ever, according to a recent report.

Some 492 companies have gone public on the Chinese mainland so far this year securing CNY536.3 billion (USD84.3 billion), according to a report released yesterday by UK professional services firm Ernst & Young. This is a gain of 25 percent and 14 percent respectively from last year.

The Shanghai bourse’s Nasdaq-style Star Market had 162 IPOs and bagged the most funds at CNY205.4 billion (USD32.3 billion). The Shanghai main board saw 92 IPOs and secured CNY166.1 billion.

The Shenzhen exchange’s Nasdaq-style ChiNext Board had the most IPOs at 199 and raised CNY144.1 billion. The Shenzhen main board and SME board had 28 listings and raked in CNY18.6 billion.

The Beijing Stock Exchange, which has only been open for little over a month, had 11 public share sales and bagged CNY2 billion.

Globally this year is expected to be the most active for IPOs in 20 years, the London-based firm said. Some 2,388 companies have gone public to date, raising USD453.3 billion. This is a 64 percent jump in volume and 67 percent increase in proceeds.

The Chinese mainland and Hong Kong continued to be top IPO destinations, with a quarter of all listings taking place there and accounting for 28 percent of total funds raised. This is despite a 35 percent year on year fall in the number of companies choosing to go public in Hong Kong to 94 and a 19 percent drop in takings to HKD323.7 billion (USD41.5 billion).

The number of companies queuing to float in Hong Kong will remain high, though, as more overseas-listed Chinese companies choose the Hong Kong market over the US as US authorities increase scrutiny of foreign firms, the report said.

The big jump in mainland listings was largely due to the implementation of the registration-based system that allows firms to list much more quickly than the approval-based model by regulators that can take months, even years. Over 70 percent of listings on the mainland used the registration-based system, accounting for 75 percent of the companies that went public and 66 percent of funds raised, it said.

While uncertainties arising from the pandemic will continue to affect global stock markets, China’s outlook remains positive, the report said. There are a number of reasons for this. Firstly, there will remain reasonably abundant liquidity, with possible greater elasticity in the first half next year than in the second half this year.

Secondly, China’s economy continues to recover and the opening up of financial markets introduces more foreign investment. Thirdly, the establishment of the Beijing bourse will encourage SMEs to list. And fourthly, stakeholders will benefit from green IPOs, as more policies are rolled out to support the nation’s carbon peak and carbon neutrality goals.

Editor: Kim Taylor