(Bloomberg) – Chinese brokers can look forward to a great year in IPOs. They have reached the highest positions in the global hierarchy for at least two decades, to which Ant Group’s multi-billion dollar debut also contributes.
China International Capital Corp. (CICC) thanks to a plethora of Chinese transactions, an economy shedding the pandemic, and liberalization of local capital markets. If Ant goes public over the expected record volume of $ 34.5 billion CICC is likely to overtake US giants like Goldman Sachs Group Inc. and Morgan Stanley this year, according to data compiled by Bloomberg.
As a group, Chinese securities firms will occupy nearly half of the top 50 underwriting positions after receiving mandates from local companies looking to capitalize on the country’s recovery from the coronavirus pandemic. A flare-up in tension between the two world superpowers has also sparked a wave of additional listings in Hong Kong by companies like Netease Inc. and JD.com.
“China’s robust pipeline compared to other parts of the world has put leading Chinese brokers at the top of the lists,” said Wang Jiyue, former banker and author of The Star Market Way, a chronicle of the new Nasdaq-like Chinese trading platform.
Twenty-four of the world’s top 50 underwriters this year are from China, up from 15 in 2019. Together, they had a combined market share of around 31% from 18.5% last year, the highest figure in data going back two decades.
CICC plays a prominent role in Ant’s debuts on the mainland and in Hong Kong. Together with its Chinese competitor CSC Financial Co., the brokerage house is the lead manager in Shanghai, while a number of US investment banks are working on the IPO in Hong Kong, including Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley.
Chinese brokers will further sharpen their profile, expects Stephanie Tang, Head of Private Equity for Greater China at the law firm Hogan Lovells. “Some banks see themselves as an important bridge between the Chinese market and the international market.”
China’s IPOs are up about 60% this year, twice the rate in the US, data compiled by Bloomberg shows.
At the same time, more and more Chinese companies are bringing listings back to Hong Kong, allowing mainland brokers to better compete with well-established global banks in the Asian financial hub.
“Many Hong Kong IPOs come from mainland China companies that have a stronger stake in Chinese brokers,” said Shen Meng, director of Beijing-based boutique investment bank Chanson & Co. “American brokers who previously IPO in Hong Kong dominated, are now only involved in a few extremely large transactions. ”
Despite their rise in the rankings, Chinese brokers are still dwarfs compared to their Wall Street counterparts. The 131 registered companies in the country together add to the assets of Goldman Sachs.
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