Regulatory crackdown shrinks China share in global TMT IPO market by 9% in 2021, finds GlobalData

China’s regulatory onslaught has negatively impacted the tech, media, and telecom (TMT) IPO market in the country in 2021. As a result, the share of TMT listings on Chinese exchanges in the total IPO proceeds raised worldwide year-on-year fell sharply from 24% to 15%, reveals GlobalData, a leading data and analytics company.

Swati Verma, Associate Project Manager of Thematic Research at GlobalData, comments: “Stricter cybersecurity regulations on both domestic and overseas listings, as well as bans on Chinese companies raising funds from foreign investors have discouraged numerous Chinese TMT players from going public. This led to a weak IPO market in 2021.”

Last year was the strongest year for TMT IPOs since 2018 at a global level. The number of IPOs increased across all the geographies, except in China. According to GlobalData, the number of TMT IPOs in China year-on-year fell by 34% in 2021.

Chinese regulators have created headwinds for companies wanting to go public. Newly imposed rules require Chinese companies to comply with a set of national laws and regulations and to ensure data security. ByteDance, for instance, had to postpone its listing plans after the regulators asked the company to focus on data security risks.

In addition, the authorities banned the private educational institutes from raising money through stock listings and barred any foreign capital investment in this sector. Moreover, the sudden and unexpected halt of Ant Group’s IPO in November 2020 is still impacting sentiment in fintech.

Verma concludes: “The regulatory crackdown has created real uncertainty in the Chinese IPO market and GlobalData expects the trend to persist in 2022 as well.”