SHANGHAI: A surge in China’s initial public offerings (IPOs) propelled Securities Co to the top spot in the global league tables for equity issues, giving the state-backed brokerage a taste of global recognition.
Goldman Sachs Group Inc fell to second place in the year to date, data compiled by Bloomberg show, marking the first time since 2009 that the number one position at the end of a quarter wasn’t held by either the United States firm or its Wall Street rivals Bank of America Corp, Citigroup Inc, JPMorgan Chase and Co and Morgan Stanley.
The shift reflects China’s resilience amid a sharp downturn in listings elsewhere, as well as the difficulty international financial services firms have faced as they attempt to expand in the world’s second-biggest economy.
Even as China reels from the impact of zero-Covid policy-driven lockdowns and a grinding property crisis, its capital markets have been a much-needed source of good news.
Companies raised US$326.1bil (RM1.5 trillion) through global share sales in the year to Sept 30, down 66% from the same period a year before, data compiled by Bloomberg showed.
In mainland China, however, equities raised US$106.8bil (RM497bil) in the first three quarters, a decrease from the same period in 2021 of just 10.1%.
Citic Securities worked on four of this year’s 10 largest listings globally. It was the sponsor and lead underwriter of CNOOC Ltd’s Shanghai share sale in April, raising 32.3 billion yuan (US$4.5bil or RM20.9bil) after US sanctions forced the state-owned energy giant’s delisting from the New York Stock Exchange.
The firm also had a role on China Tourism Group Duty Free Corp’s HK$18.4bil (US$2.3bil or RM10.7bil) Hong Kong listing.
Global banks have struggled in China even after they were allowed to take control of their local joint ventures.
With executives expressing concern over issues ranging from licenses to data security, the latest point of tension is pay, with regulators demanding Credit Suisse Group AG, Goldman Sachs and UBS Group AG give details on how they compensate top bankers, Bloomberg News reported.
Policymakers have also pressured China’s state-owned groups to reduce salaries and costs, with brokers including Citic and CSC Financial Co slashing travel budgets for junior bankers and even senior directors.
China’s IPO pipeline remains promising, with seed and fertiliser giant Syngenta Group considering launching its 65 billion yuan (RM42.5bil) IPO by the end of the year. Citic Securities is among the banks working on the deal.
There are also the expected reforms to the country’s IPO system that could make it easier for companies to go public.
“Citic Securities’ earnings in the second half of the year 2022 could be sturdier than its peers amid industry headwinds,” Bloomberg Intelligence said.
Investment banking fee income at China’s largest equity and bond underwriter could benefit from a robust IPO pipeline, inclusion on the regulator’s “white list” and the anticipated rollout of the registration-based system for listings across all trading venues in mainland China. — Bloomberg
