SZ adds 18 A-share firms, tying with Shanghai for first place

Shenzhen-based companies have maintained a fast pace of listing shares on the domestic A-share market this year as an increasing number of the city’s tech firms turn to the domestic capital market to fund their expansion plans.

Shares of 18 Shenzhen companies made trading debut on the domestic stock exchanges in the first eight months this year, tying with Shanghai for the first place in the country, according to figures from market intelligence provider Tonghuashun.

The Shenzhen Stock Exchange. Xinhua

The majority of these companies are from emerging industries, such as information technology, artificial intelligence and semiconductor.

From January to August, both Shenzhen and Shanghai added 18 newly listed companies, followed closely by Suzhou in eastern China’s Jiangsu Province and Beijing with 16 and 15, respectively.

The Shenzhen firms raised a total of 25.37 billion yuan (US$3.49 billion) in their initial public offerings, slightly less than the 26.15 billion yuan by Shanghai-based firms.

Seven out of the 18 Shenzhen firms are listed on Shanghai’s NASDAQ-style, tech-focused sci-tech innovation board, nine are traded on the ChiNext growth enterprise market and two on the main board of the Shenzhen Stock Exchange, Tonghuashun data showed.

The sci-tech innovation board, also known as the STAR Market, was launched on the Shanghai bourse July 22, 2019. The market, now home to some of China’s biggest chipmakers, biotech companies and high-end manufactures, is tasked with funding the country’s tech innovation as China seeks to achieve tech independency and self-sufficiency.

More than 80% of the 18 Shenzhen companies are from emerging industries such as information technology, new energy and semiconductor, Tonghuashun data show.

Some of these newly listed companies have delivered strong financial results for the first half of 2023. Skyverse Technology Co., which is mainly engaged in semiconductor quality control equipment, said net profit surged 242.90% from a year ago to 45.94 million yuan, while Shenzhen Manst Technology Co., which deals with high-precision slot coating dies, coating equipment and coating accessories, achieved a net profit of 159 million yuan, an increase of 97.10% year on year, according to their half-year financial reports.

Shenzhen has a large pool of listing hopefuls. Tonghuashun data show that 11 Shenzhen companies have passed the listing reviews so far this year but still awaited the nod from regulators for the trading debut of their shares. A total of 48 companies in the city have begun the so-called pre-listing tutoring process with investment banks ahead of a planned initial public offering so far this year, ranking third in the country after Jiangsu and Zhejiang provinces in East China.

Pre-listing tutoring is a compulsory procedure in China that every initial public offering applicant must go through before filing their listing plan to regulators, which can take between three and 12 months. During the tutoring period, investment bankers coach company executives on initial public offering-related issues.

Shenzhen has set an ambitious goal to list the city’s firms. According to an action plan unveiled Nov. 16 last year by Shenzhen’s industry and information technology bureau, the number of Shenzhen-based companies listed on domestic and foreign stock exchanges is expected to exceed 600 by 2025, with funds raised from the initial public offerings and refinancing topping 300 billion yuan and a total of over 3,000 companies in the pipeline for listing.

Official figures issued earlier this year by Shenzhen’s financial industry development and service office showed that 42 Shenzhen companies got listed in 2022 and the number of the city’s listed companies jumped to 535 at the end of last year, with 405 firms listed on the Shenzhen, Shanghai or Beijing stock exchange.