Global IPO market continues to plummet while China’s performance is outstanding

• Stock exchanges of mainland China among most active by share of global total YTD 2022
• Asia-Pacific prevails due to outstanding performance from China¹
• Highest volume of IPOs is in technology and energy sector now leading on proceeds

The global IPO market saw a total of 992 IPOs raising US$146 billion year-to-date (YTD) 2022, a 44% and 57% decrease year-over-year (YOY), respectively. This follows this year’s trend of which IPO companies and investors encountered mounting macroeconomic challenges, market uncertainties, increasing volatility and falling global equity prices. Volatility² increased from 19.7 in 2021 to 25.6 YTD 2022. Chinese companies have delivered outstanding results, leading to a better market performance in Asia-Pacific. Stock exchanges from mainland China were the most active ones by share of global total YTD 2022.

The technology sector continued to lead by number of IPOs YTD, although the average deal size came dropped from US$261 million to US$123 million YOY. The energy sector overtook by proceeds with the largest increase of 176%, driven largely by three of the global top five deals YTD 2022. The consumer products sector witnessed the biggest drop in average deal size (69%).

Q3 2022 saw the lowest SPAC IPO proceeds since Q3 2016, along with de-SPACs struggling to find the right targets. The SPAC market was continually challenged this quarter with only 17 deals, raising US$0.9 billion. A record number of existing SPACs were actively seeking targets with the majority facing potential expiration next year. 

Paul Go, EY³ Global IPO Leader, says: “With uncertainties being the IPO market’s biggest challenge, companies and investors continue to wait for a more stable and positive stock market sentiment before any sustained appetite for IPO activity re-emerges.” 

Overall regional performance: Asia-Pacific prevails due to outstanding performance in China

Major economies and financial markets in the Americas and EMEIA remain under pressure as quantitative tightening kicks into a higher gear. Americas exchanges saw the sharpest decline, recording only 116 deals raising US$7.5 billion YTD, a decrease of 94% in proceeds and 72% in volume, YOY. In direct contrast to a record-breaking year in 2021, YTD Americas IPO activity sank to its lowest level in 20 years.

Mainland China continues to be the engine of IPO activity with the support of government policies, making Asia-Pacific market performed relatively better. Asia-Pacific accounted for 61% and 69% of global IPO number and proceeds respectively, with five of the top 10 IPOs coming from this region YTD. 

Stock exchanges of mainland China are the most active ones during YTD 2022

Even with the increase in application withdrawals in mainland China under a strict IPO review process, IPO activity has remained steady and normalized. Hong Kong has also started to see some recovery with a small peak spotted in Q3 2022. Besides the increase of deal number, proceeds also rose with two big IPOs’ debut in the Hong Kong market. In July, the Shanghai London Stock Connect has expanded to China-Switzerland Stock Connect. Six mainland China listed companies issued their GDRs in the Swiss stock market.

By number of IPOs, Shenzhen and Shanghai Stock Exchanges ranked first and second, with deals of 148 and 119 respectively. By proceeds, stock exchanges of Shanghai and Shenzhen were the top two exchanges with proceeds of US$ 47.5 billion and US$26.0 billion respectively. 

Terence Ho, EY³ Greater China IPO Leader, says: “The measures of the China Securities Regulatory Commission (CSRC) will attract more companies, particular overseas companies, to list in Hong Kong. In the rest of 2022, IPO activity in Hong Kong is expected to be stronger, despite being impacted by the US market volatility, the appreciation of US dollar and geopolitical risks. For mainland China, with the 20th National Congress planned, imminent signs of recovery in the economy are likely to result in some capital-market-friendly policies being enacted. We are cautiously optimistic that the IPO market will be more active in Q4 or 1H of 2023 in China.”

Q4 2022 outlook: icebreakers will pave the way

In the Americas, IPO pipelines are waiting for the market to re-open next year, and in EMEIA, tough market conditions continue to squeeze IPO windows. For Asia-Pacific, while public filings for IPOs have not picked up, activity remains strong in the background as companies evaluate their options for 2023. 

Go says: “In respect of global IPO activities, many companies’ IPO plans were put on ice in early 2022, in anticipation of more favorable market conditions. Provided that market uncertainties and volatility subside, the launch of long-awaited blockbuster IPOs together with improved after-market returns may reverse the sentiment and attract more companies to follow.” 

¹ Mainland China, Hong Kong and Taiwan are included

² CBOE VIX average

³ Ernst & Young Hua Ming LLP

-Ends-

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About the data

The data presented here is available on ey.com/ipo/trends. Year to date 2022 (i.e., January-September) is based on completed IPOs from 1 January 2022 to 21 September and expected IPOs by the end of September 2022. Data as of close of business 21 September UK time. All data contained in this document is sourced from Dealogic, CB Insights, Crunchbase, SPAC Insider and EY analysis unless otherwise noted. SPAC IPOs are excluded in all data included in this report, except where indicated.

This news release has been issued by EY China practice, a part of the EY global network.