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Chinese cos take record 50pc of global equity raising in H1

HONG KONG: Firms in China brought in half of equity capital raised globally this year so far, setting a record that...

Jun 30 2020

HONG KONG: Firms in China brought in half of equity capital raised globally this year so far, setting a record that highlights the economy's earlier revival from the COVID-19 pandemic, plus the degree to which soured US relations are turning Chinese firms homeward.

China-based companies sold shares worth $32.1 billion in January-June including multi-billion-dollar secondary listings in Hong Kong, equivalent to 49.8% of worldwide offerings, showed data from Refinitiv. The total for US firms was $15.8 billion.

"With massive liquidity injections by various governments (supporting virus-hit economies), I'm not surprised by the size of Chinese capital raised this year - and the trend may continue," Li He, capital markets partner at Davis Polk, said of China firms taking advantage of their early lockdown emergence.

China was hit by the novel coronavirus in December and was the first country to impose virus-prevention lockdown measures on individual movement and business activity in late January. Markets began their return to normality in April.

Chinese fundraising has been helped by the popularity of Shanghai's year-old growth-focused STAR Market, as well as well-received initial public offerings (IPOs) in Hong Kong and the massive secondary listings - including the $3.9 billion raised by e-tailer JD.com Inc this month and $3.1 billion by games developer NetEase Inc .

"For Chinese companies, both the Hong Kong and US markets are getting back to normal," said Houston Huang, head of global investment banking for China at JPMorgan. "Market activity (deal volume) is much better than anybody expected at the beginning of the year."

Escalating Sino-US geopolitical tension over issues such as trade is widely expected to prompt more US-listed Chinese firms to conduct secondary listings closer to home where they can raise funds in markets absent of anti-Chinese sentiment.