CHINA: An Introduction to Capital Markets: Debt & Equity (PRC Firms)
Review of China's A-share IPO in 2023 and Outlook for 2024
A-Share IPOs in 2023: Initial Rise Followed by Decline
A-share IPO financing in 2023 showed an “initial rise followed by a decline” pattern. From March to August 2023, the number of A-share IPOs and the financing amount remained high. However, the China Securities Regulatory Commission (CSRC) clearly stated on 27 August that there would be a “temporary tightening of IPO pace” to maintain market stability. Starting from September, the number of A-share IPOs and the financing amount experienced a steep decline.
Rapid Development of the Beijing Stock Exchange (BSE)
In contrast to the cooling trend of IPOs in the Shanghai and Shenzhen stock markets, the listing activity on the BSE heated up in the second half of 2023. On 1 September, the CSRC formulated and released the “Opinions on Building the BSE with High Quality”. Driven by the reform signals of the BSE, in the fourth quarter of 2023, the acceptance speed of the BSE “rose against the trend”, reflecting the gradual release of the effects of the exchange’s reform.
Understanding the Current Policy Changes in the A-Share Market
The policy changes in the A-share market in 2023 reflect the Chinese policymakers’ efforts to achieve a balance between the long-term strategy of “capital driving technological innovation” and the immediate priority of maintaining financial security.
The registration-based system drives significant achievements in the A-share market
The transition to the registration-based system in the A-share market has yielded remarkable results. By the end of 2021, the number of A-share listed companies reached 4,697, surpassing the quantity of the US stock market. According to Wind data, the total amount raised through IPOs in the A-share market increased to CNY586.886 billion in 2022, surpassing that of the United States. Although the total amount raised in A-share IPOs decreased to CNY356.005 billion in 2023, it still retained its position as the global leader.
Safeguarding financial market stability becomes a priority in the second half of 2023
Against the backdrop of 11 consecutive interest rate hikes in the United States, the power struggle among major countries in the financial sector significantly intensified in the second half of 2023. Allowing the A-share market to decline could potentially trigger systemic financial risks. Since September, the CSRC has gradually tightened the pace of IPOs to maintain stable market operations. This reflects the policy logic of “adhering to bottom-line thinking and extreme thinking, and being prepared to withstand significant tests even in turbulent and challenging times”.
Vigorously developing the BSE – a breakthrough path that balances long-term policies and immediate priorities
Currently, the A-share market needs to maintain market stability on the one hand and adhere to the long-term policy of “driving development through innovation” on the other hand. In this context, vigorously developing the BSE becomes an important breakthrough for the development of the A-share market.
Firstly, the rapid expansion of the BSE is not sufficient to make a significant negative impact on the trends of the A-share secondary market. Compared to the Shanghai and Shenzhen stock exchanges, the BSE accounts for only about one-tenth of the number of listed companies and about one-hundredth of the market capitalisation. Even if the BSE expands rapidly in the short term, it would not have a significant impact on the trends of the A-share market.
Secondly, the expansion of the BSE holds extraordinary significance for China’s economic breakthrough. The BSE is positioned as the "main battlefield for serving the innovative development of small and medium-sized enterprises (SMEs)”. SMEs have contributed over 50% of the national tax revenue, over 60% of the GDP, over 70% of technological innovation achievements, and over 80% of employment opportunities. They form the cornerstone of China’s economy, with innovative SMEs being of the utmost importance. The BSE provides capital support to earlier and smaller innovative enterprises. As time goes on, the assistance provided by the BSE to the Chinese economy will gradually become more evident.
Outlook for the A-share Market in 2024
The A-share market in 2024 will continue to seek a balance between development and security. In January and February 2024, the Shanghai and Shenzhen stock markets experienced an accelerated downturn, indicating that resolving systematic risks and maintaining market stability remain crucial tasks. The policies in the A-share market in 2024 will continue to strike a balance between long-term policies that drive innovation through the capital market and short-term goals of maintaining financial stability.
IPOs and refinancing
IPOs and refinancing on the Shanghai and Shenzhen stock markets will continue to be tightened. On 15 September 2023, officials from the CSRC stated that the periodic tightening of the IPO pace is a measure to maintain the stability of the market. From practical experience in the past months, the acceptance, review, and issuance speed of A-share IPOs and refinancing have significantly slowed down but have not come to a complete halt. It can be expected that the aforementioned situation will continue until the risks in the A-share market are fully released. Furthermore, although the tightening cycle of the US Federal Reserve is nearing its end in early 2024, the most dangerous period of global financial turbulence has not arrived yet. If financial security issues further manifest, there is still a possibility of the suspension of A-share IPOs and refinancing on the Shanghai and Shenzhen stock markets in 2024.
Listings bottleneck
Traffic congestion may occur in the listing process on the BSE in 2024. As more and more SMEs have shown interest in listing on the BSE, it is expected that the number of listing applications on the BSE will gradually increase after the second quarter of 2024. While the BSE currently has a short processing time for applications and efficient reviews, there is a possibility of congestion in listings on the BSE as the peak period for IPO applications arrives in the second half of 2024 and 2025.
Mergers and acquisitions
There may be an increase in mergers and acquisitions and restructurings of listed companies in 2024. In recent years, the CSRC has continuously optimised the regulations for mergers and acquisitions and restructurings of listed companies, including the introduction of the “small and fast” review mechanism for restructurings, the full implementation of a registration-based system for restructurings, and issuing rules for targeted convertible bond restructuring. Recently, relevant departments of the CSRC have expressed that the next step will be to scientifically co-ordinate the relationship between promoting development and strengthening regulation and risk prevention, and to take multiple measures to invigorate the M&A and restructuring market.
Continued tightening of regulatory measures on intermediary institutions in 2024
Since 2023, the CSRC has been conducting intensive investigations into cases of fraudulent practices by listed companies. Additionally, Chinese judicial authorities have issued effective judgments in civil and criminal cases related to fraudulent practices by listed companies. In just over a month into 2024, nearly 40 organisations, including securities firms, accounting firms, law firms, and valuation agencies, have already received various types of penalties from the CSRC and the Shanghai and Shenzhen stock exchanges. It sends a signal of “strict regulation”, with the aim of compelling securities services organisations to assume their responsibilities and effectively play their role as “gatekeepers” of the capital market.
Conclusion
In 2024, the tightening cycle of the US Federal Reserve may come to an end and even transition into an easing cycle. Global economic uncertainty may intensify during this transition process. 2024 is destined to be an extraordinary year. It is believed that the young Chinese A-share market will further grow amidst the dramatic adjustments in the world economic order.
2023年中国A股IPO回顾与2024年展望
1 2023年的A股IPO回顾
1.1 2023年A股IPO先抑后扬 2023年A股IPO融资呈现“先扬后抑”的走势。
2023年3月至8月期间A股IPO家数与融资额保持高位。8月27日中国证监会明确“阶段性收紧IPO节奏”以维护市场稳健运行。自9月起A股IPO发行家数与融资额出现断崖式下跌。
1.2 北交所高速发展
与沪深两市IPO快速降温形成鲜明对比的是, 2023年下半年北交所上市热度升温。9月1日中国证监会发布《关于高质量建设北京证券交易所的意见》。在北交所改革信号驱动下, 2023年4季度，北交所受理上市申请的速度“逆势上扬”, 折射出北交所改革的效应正逐步释放。
2 怎样理解当前的A股市场政策变化
2023年A股市场政策变化体现了中国的政策制定者努力实现“资本市场推动科技创新”的长期策略与维护金融安全的当务之急的平衡。
2.1 注册制推动中国A股市场取得显著成效
中国A股市场实行注册制成效显著。2021年末A股上市公司家数4697家, 数量超过美国股市。Wind数据显示，2022年A股IPO募资总额增至5868.86亿元, 融资额超过美国。尽管2023年A股IPO募资总额降至3560.05亿元, 但依然蝉联全球冠军。
2.2 维护金融市场稳定成为2023下半年当务之急
在美国连续11次加息的背景下, 2023下半年金融领域的大国博弈明显加剧，在此背景下放任A股市场下跌可能引发金融系统性风险。中国证监会自9月起阶段性收紧IPO节奏以维护市场稳健运行, 体现了“坚持底线思维和极限思维，准备经受风高浪急甚至惊涛骇浪重大考验”的政策逻辑。
2.3 大力发展北交所是兼顾长期政策与当务之急的突围之路
当前一方面需要维护市场稳定, 另一方面需要坚持“创新驱动发展”的长期政策。在此背景下, 大力发展北交所, 成为A股市场发展的重要突破口。
首先, 北交所快速扩容不足以对A股二级市场走势形成冲击。北交所与沪深两市相比, 上市公司家数约占十分之一, 市值规模约占百分之一。即便北交所在短期内快速扩容, 对于A股市场走势不足以形成冲击。
其次, 北交所扩容对于中国经济突围意义非凡。北交所定位于“打造服务中小企业创新发展的主阵地”。中小企业贡献了全国50%以上的税收，60%以上的GDP，70%以上的技术创新成果和80%以上的劳动力就业，是中国经济的基本盘，而创新型中小企业更是重中之重。北交所为更早更小的创新企业提供了资本支持。随着时间推移, 北交所对中国经济的助力将逐步显现。
3 2024年A股市场展望
3.1 2024年A股市场继续在发展与安全两大目标之中需求平衡
2024年1-2月沪深股市加速下探, 表明化解系统性风险维持市场稳定仍然是紧要任务。2024年A股市场政策将继续维持在资本驱动创新的长期政策与维护金融稳定的短期目标之间寻求平衡。
3.2 沪深两市的IPO与再融资继续紧缩
2023年9月15日，中国证监会有关部门负责人答记者问时表示，阶段性收紧IPO节奏，是维护市场稳健运行的安排。从近几个月实践情况看, A股IPO及再融资的受理审核及发行速度大幅放缓, 但未完全停滞。可以预计, 在A股市场风险充分释放之前, 上述立场可能继续维持。 尽管2024年初美联储加息周期已经临近尾声, 而此时世界金融动荡最危险的时刻尚未到来。如果金融安全问题进一步显现, 2024年沪深两市A股IPO和再融资暂停的可能性仍然存在。
3.3 2024年北交所上市可能出现拥堵现象
由于更多的中小企业对在北交所上市产生兴趣, 预计2024年2季度后北交所上市申报数量将逐渐增多。随着2024年下半年及2025年北交所上市申报的高峰期到来, 北交所上市也可能出现拥堵现象。
3.4 2024年上市公司并购重组可能增多
近年来中国证监会持续优化上市公司并购重组监管规则, 包括推出重组“小额快速”审核机制, 全面实行重组注册制，出台定向可转债重组规则等。近期中国证监会相关部门表示，下一步将科学统筹促发展与强监管、防风险的关系，多举措活跃并购重组市场。
3.5 2024年对中介机构监管将持续趋严
2023年以来, 中国证监会密集查处上市公司造假案。中国司法机关对上市公司造假案相关的民事和刑事诉讼案件作出判决。进入2024年才1个多月,包括证券公司、会计师事务所、律师事务所、评估机构等在内, 已有近40家机构收到中国证监会及沪深交易所开出的“罚单”。这释放出“从严监管”的信号,目的是倒逼中介机构归位尽责, 做好资本市场“守门人”角色。
结语
2024年美联储加息周期可能终结甚至转入降息周期。在周期转换过程中全球经济不确定性可能加剧。2024年注定是不平凡的一年。相信年轻的中国A股市场将在世界经济秩序的剧烈调整中进一步成长。