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China's Technology, Media, and Telecommunication IPOs are expected to Stall

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Published on : Sep 09, 2015

The technology, media and telecommunication IPOs in China have reached a brand new level in the first quarter of this year. There are about 42 Chinese technology, media and telecommunications IPOs in the first half of 2015 that showed an increase of 75% y-o-y. Their financing amounted to 22.1 bn yuan, says the Tuesday report from PricewaterhouseCoopers. 

However, the overall momentum is expected to slow down over the next six months owing to the capital market variations.  

The country has witnessed a more smooth and translucent listing process for IPOs that have attracted more domestic exchanges. Moreover, the strong momentum that is likely to occur in the market is anticipated to slow down in the second quarter of this year. This will be due to the temporary freeze to IPOs by various regulatory bodies to match up with the current significant capital market variations, added northern China technology industry leader in alliance with PwC China. 

On July 4, the State Council also ordered the suspension of new share offerings, after a three-week stock market downfall. 

The market leader of Beijing’s entrepreneur group and also the head of the private equity group at PwC China in northern China said, the IPO downfalls create growth opportunities mainly for private equity companies. Opportunities also increase for sovereign wealth funds and hedge funds due to the financing demand from enterprises and their strong presence.     

The report said that 30 were on Shenzhen’s ChiNext board as well as small and medium-sized enterprise board. Nine were on Shanghai’s main board and three were undertaken overseas.
Moreover, the average price-earnings ratio of Chinese A-share technology and media companies were floating high as 74 by the end of August 31. While, by end of June 30 it had been 115. 

Strong growth is still anticipated in the long run and on domestic exchanges due to the introduction of the new registration-based systems and also the continuation of multi-level capital market reform, added Zhang.