China IPOs are uncoupling from Wall Street too

MUMBAI, June 12 (Reuters Breakingviews) – China’s primary capital market has never been strongly connected to local economic performance thanks to Beijing’s micromanagement of initial public offerings. Increasingly it is detaching from Wall Street too. Despite a weak stock market and doubts about the vigour of China’s post-pandemic recovery, seeds-to-pesticides maker Syngenta is edging closer to a $9 billion debut, the mainland’s largest since Agricultural Bank of China’s (601288.SS) in 2010. It’s a suboptimal time to list. Nonetheless, the Shanghai Stock Exchange will hold a hearing for the deal on Friday, per Refinitiv’s IFR. Syngenta is a pillar in Beijing’s strategy to shore up food security and will use the deal to pay down debt. It is also an example of how state-owned Chinese giants can acquire and successfully run overseas companies.

The landmark IPO coincides with signs that Wall Street’s small position in the market is shrinking further. Homegrown giants CICC (3908.HK), BOC International (601696.SS) and Citic Securities (600030.SS) have leading roles on the deal. Foreign peers are nowhere. Overall, they have been involved in just 1.1% of the 117 new listings worth $27 billion in the mainland this year. That is a lower proportion than in any full year since Dealogic began collecting data in 2009, per the FT. The pain is compounded by a deal drought in Hong Kong, where the outsiders typically have a better standing. Syngenta’s blockbuster IPO will be an awkward new milestone for Wall Street already facing life in China’s second tier. (By Una Galani)

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