China’s Thriving IPO Market Might Just Be an Optical Illusion

(Bloomberg) -- While the coronavirus outbreak has put a halt to a big chunk of China’s economy, the country’s domestic IPO market has charged forward. That might not last, though.

Twelve companies have priced initial public offerings this month, with a combined value of $2.8 billion, according to data compiled by Bloomberg. That makes it the busiest 10 business days following the Lunar New Year break since 2015.

The virus that has killed more than 1,700 people has made it difficult in some markets to conduct roadshows given travel restrictions. But in China, with price consultations getting done online through an order system run by the exchange, it’s had little impact. The question is, how long can this last?

The companies that have recently gone public are those that had already cleared listing hearings before the Lunar New Year, when concerns over the virus surged, said Alexander Yao, general manager at Roadshow Investment Co. in Beijing. “For companies that are yet to get regulatory approvals, there is a chance to see a delay for the process given the current difficulties to do on-site due diligence and auditing,” Yao added.

The China Securities Regulatory Commission had cleared listing hearings for 26 IPOs this year before the Lunar New Year holiday. Such work has come to a halt, with no review meetings scheduled since the end of the break.

Hong Kong, a popular offshore listing venue for mainland companies, has already taken a hit on virus fears. The bourse started the new decade strong, with 17 companies listing in a single week in January. But only one engineering services company, SEM Holdings Ltd., has priced an IPO since the market reopened after the Lunar New Year holiday, data compiled by Bloomberg show.

Read more: China IPO Work Hindered by Virus Travel Restrictions

The virus has made a dent in IPO activity across Asia as well, causing several deals to be postponed. PT Lion Mentari Airlines, the biggest budget carrier in Indonesia, was the latest to postpone listing plan due to the coronavirus outbreak, IFR reported.

--With assistance from Irene Huang.

To contact Bloomberg News staff for this story: Zhen Hao Toh in Singapore at ztoh4@bloomberg.net;Ken Wang in Beijing at ywang1690@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Cecile Vannucci

©2020 Bloomberg L.P.

With assistance from Bloomberg