Dec 30, 2018

The Chinese IPO boom

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Adapted from a Caixin article via Dealogic; Chart: Naema Ahmed/Axios

While American companies were returning hundreds of billions of dollars to shareholders, for Chinese companies the flows went in the other direction, Caixin's Yang Ge reports.

Driving the news: They raised an astonishing amount of money in 2018 — some $45.6 billion in Hong Kong and New York alone. That's more than double the $19.2 billion raised in 2017; it's also more than double the $20.7 billion raised in Chinese domestic IPOs.

  • Cellular tower operator China Tower Corp raised $7.5 billion in August. By contrast, the biggest U.S. IPO of 2018, Axa Equitable, raised just $2.75 billion.
  • There's still a healthy pipeline of Chinese companies looking to go public in 2019, although a bear market and/or a trade war could derail those plans.

Be smart: A lot of the money piling into these IPOs is entirely speculative, and that pool of liquidity can dry up as fast as it appeared. Chinese individual investors are being hit by a wave of shadow-banking defaults, and high-profile startups, especially in the scooter-sharing space, are running aground.

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