Scott Murdoch and Julie Zhu

HONG KONG, (Reuters) – The expected announcement by Beijing of new regulations for Chinese companies’ offshore listing will give clarity to jittery investor, analysts and investment bankers.

The regulators are considering new regulations to scrutinize offshore listing plans by Chinese companies with variable-interest entity (VIE), which allows foreign investors the opportunity to invest in stock.

Reuters reported that this structure has allowed a surge in listing activity in the United States during the last two decades.

These new rules are coming after a tepid 2021 in Hong Kong. The Asian-Pacific’s largest listing market, Hong Kong has had 26.7 billion IPOs this year. This compares to 31.8 billion in 2020.

By adding second listings (which include secondary and dual-primary floats of U.S. listed Chinese companies), there were $41.3 billion of Hong Kong activity by 2021, as compared to $50.8 billion in 2020.

According to Bankers, the new rules will make it easier for potential listing candidates to list and encourage them to seek public markets. This will be especially true for firms working in media and technology sectors which were the focus of a unprecedented regulatory crackdown earlier this year.

If you had to use one word to describe IPOs 2021, it would be ‘uncertainty. Li Hang is the head of ECM at CLSA and syndicate.

“Next year will have more policy certainty than 2021. While certainty could be interpreted as more rigid (rules), it should also mean less uncertainty. It is crucial. IPOs are really affected by uncertainty.”

The threat of Hong Kong delisting from the U.S. remains high and bankers believe that Hong Kong will see its second listing increase in 2022.

David Chin, UBS China’s China Head, stated that there are over 50 U.S. listed Chinese companies.

“We expect to see many of these people come to Hong Kong in the second listing next year.”

Strong Year Elsewhere

Despite China’s decrease in deal volume across Asia-Pacific, Japan included, $166 billion was invested in IPOs. This is a significant increase from the $120.1 billion that occurred last year. It makes it the strongest year for the region since 2010.

The value of transactions increased in South Korea, India, and Australia.

The slowdown in China historically has meant that the rest of Asia slowed. “This year, even though China experienced a slowdown, the other markets have filled that gap,” stated William Smiley (NYSE: Asia ex-Japan), co-head for equity capital markets at Goldman Sachs.

The region’s IPOs were more than a third of those in the healthcare and technology sectors.

Magnus Andersson (co-head Asia Pacific ECM) stated that the pipeline for next year will be more varied in geography. Korea, India and Southeast Asia are together larger relative to China, and have greater sector exposure. Morgan Stanley (NYSE:).

We are now seeing less media, tech, and healthcare and more FIG (financial institution group). The global cyclicals trend is being reshaped.

The Refinitiv data revealed that CITIC and Goldman Sachs were the three highest-ranked banks in Asia for Asian equity market activity.