China's initial public offerings (IPOs)fundraising in the A-share market hit a 10-year high, exceeding 450 billionyuan ($69 billion) as 2020 closes in.

A total of 369 companies launched IPOs thisyear in Shanghai and Shenzhen stock markets have raised more than 10 billionyuan in IPOs as of December 18,2020, according to Wind economic database.

Jiangsu Province has the most listedcompanies at 59, while Zhejiang Province, Guangdong Province, BeijingMunicipality and Shanghai Municipality are next, with 56, 53, 41, 37 listedcompanies, respectively.

The number of listed companies increased byover 80 percent compared with 2019, and the amount of funds raised grew bynearly 80 percent from a year earlier. 

ShanghaiStock Exchange ranks top of global bourses

The main board and sci-tech innovationboard in Shanghai led fundraising, with 117 billion yuan and 214 billion yuanrespectively.

Of the 369 listed companies, 313 are fromthe private sector, and account for 61 percent of total funds raised at 276 billionyuan, as of time of writing.

A large number of tech companies includingthose of mechanical equipment, electronics, chemical, pharmaceutical andbiological sector also debuted on the A-share market this year, as theregistration-based IPOs system was adopted on the country's Nasdaq-styleChiNext board and sci-tech innovation board.

The Shanghai Stock Exchange ranked at thetop among global bourses in terms of IPO deals in 2020, driven by the country'sreform of a registration-based IPO issuance system, according to a reportissued.

Strong support from the government topromote reforms in the capital market also boosted IPOs in China, according toTerence Ho, an EY partner.

As China controlled the coronaviruspandemic at an earlier stage, IPO activities in the A-share market remainedstrong this year, which hit the highest level in a decade in terms offundraising, the report indicated.

By the end of 2020, 395 companies areexpected to be listed on the A-share market, which will raise about 470 billionyuan, the highest level since 2010. The amount of raised funds is likely toincrease by 55 percent from a year earlier, and it account for nearly 45percent of the total amount globally, the report said.

In the A-share market, the science andtechnology innovation board, or the STAR board in Shanghai, has overtaken themainboard to lead in IPO activities in terms of deal volume and the amount offundraising, as the registration-based system further boosted new shareissuance, the report said.

The firm expects that in 2021, IPOactivities will remain active in the A-share market. "Theregistration-based system is expected to be fully implemented next year, withfurther strengthening of the A-share exit system, which will help to improvethe A-share ecosystem," said EY's partner, Vivien Zhang.

ChinaIPO hopefuls surge to three-year high

The number of companies seeking to gopublic in mainland China has jumped to about 580, a three-year high, encouragedby a slew of market reforms and a bumper year for equity financing in 2019.

It includes 420 Chinese firms waitingapproval to list in Shanghai or Shenzhen, official data shows, while another161 have applied to Shanghai’s six-month-old STAR Market, China’s answer toNasdaq.

The combined number is double levels a yearearlier, and the most since 2016, when there was a long queue of IPO hopefulsafter officials shut down entry into the market for four months following astring of boom-and-bust listings.

The good times for China IPOs contrast withweak markets for listings globally, with sentiment hit by trade tensions andsome high-profile IPO flops. Worldwide, the number of IPOs tumbled 19% in 2019and fundraising shrank 4%, EY said.

Also helping has been a climb of 30% forChina's benchmark CSI300 Index .CSI300, one of the world's best-performingmajor indexes this year due in part to foreign inflows after Chinese stockswere included in global benchmarks.

Some 200 Chinese companies have listed onthe mainland this year, almost doubling from the total for 2018, and moneyraised jumped 82% to a seven-year high of 252.8 billion yuan ($35.9 billion),EY said.

The biggest reform has been the creation ofthe STAR Market, which has a shorter approval process and is the first mainlandChina exchange-run board to not make profitability a listing requirement.

Widely seen as China’s latest move tobecome self-sufficient in core technologies, it and other mainland boards havegained momentum as companies seek cash amid bruising trade tensions with theUnited States. In contrast, U.S. listings by Chinese companies have slumped.

Keen to reduce the Chinese economy’s heavyreliance on bank lending, policymakers are likely to continue with reforms in2020, with Shenzhen’s star-up board ChiNext expected to be revamped in aneffort to replicate the STAR Market’s success.

Beijing has also drafted plans to improvethe country’s New Third Board, a now-lifeless equity market that was initiallydesigned to fund small companies.

“China is seeking to establish a multi-layered capital market,” saidGui Haoming, analyst at Shenwan Hongyuan Securities. “The key is toreinvigorate the (stock) market, improve its efficiency, and give it a biggerrole in allocating capital.”

Chinato dominate world IPO league in 2020

China will probably be home to three of theworld's top five stock exchanges that generate the most money from new listingsthis year, a new report showed.

The Hong Kong and Shanghai stock exchangesare expected to rank second and third among global exchanges for the amount of"IPO proceeds," consisting of funds raised from IPOs and secondarylistings, generated in 2020, behind only the Nasdaq, according to estimates byKPMG International.

The New York Stock Exchange, which rankedfifth last year, is expected to come in fourth this year, while the ShenzhenStock Exchange, which didn't make the top five in 2019, is set to come infifth, according to a KPMG report.

The Shanghai and Hong Kong exchangessecured the three largest IPOs in the world this year.

Chinese leading contract chipmaker,Semiconductor Manufacturing International Corp., debuted in Shanghai with a$7.5 billion listing in July, while JD.com went public in Hong Kong earlierthis year with a $4.5 billion secondary listing.

In January, rail operator Beijing-ShanghaiHigh-Speed Railway held a $4.4 billion IPO in Shanghai.

The Shanghai and Shenzhen stock exchangesare expected to record 383 new listings this year for a combined 461 billionyuan ($70.4 billion), an 82% year-on-year increase in terms of funds raised,KPMG said in the report, making 2020 the most active year for new fundraisingsince 2011.

Louis Lau, a partner at KPMG China, saidthat the expansion of the registration-based IPO system this year has deepenedreform of the Chinese mainland's capital markets, amid the country's focus onfostering multilevel capital markets.

In August, the ChiNext board in Shenzhenreplaced its approval-based IPO system with a new registration-based one, amove seen to compete with the Nasdaq-style STAR Market in Shanghai created lastyear.

The Hong Kong IPO market has also shownresilience amid the fallout of the COVID-19 pandemic. About 140 IPOs areexpected to be completed in the city this year, raising HK$389.9 billion ($50.3billion) in total.

That figure represents a 24% year-on-yearincrease in funds raised. It also marks the most active year for newfundraising in the city since 2011, according to the report.

In Hong Kong, homecoming listings are maindrivers for the increase in fundraising, with nine U.S.-listed companies withChinese roots completing their secondary listings, which accounted for about34% of all funds raised in the city, the report showed.