Friday, July 19, 2024

China minted dozens of new IPO billionaires in 2015, even as stock markets crashed

China’s entrepreneurs continued to mint money in 2015, despite a stock market crash and an ongoing economic slowdown. China added 104 new US dollar billionaires last year, while the US lost two, on the back of IPOs of companies.

China, which includes Hong Kong and Macau, now has 534 billionaires versus the US’s 535, according to a study published Wednesday (Feb. 24) by Shanghai-based research institute Hurun. India is a distant third with 111 billionaires. The China figure is a 24% leap from a year ago.

Mainland China’s billionaire population surpassed the US’s for the first time in August of 2015, with 596 billionaires, an earlier Hurun report said. But that mainland figure plummeted to 470 by year end, on the back of falling stocks.

Together, China and the US account for nearly half of the billionaires on the planet. Beijing, for the first time, has taken over New York to become the world capital of billionaires with 100 live there.

“Despite its own slowdown and falling stock markets, China minted more new billionaires than any other country in the world last year, mainly on the back of new listings,” Rupert Hoogewerf, head of Hurun, said in the report. A global slowdown, the strengthening US dollar, and an oil price drop hurt the rest of the world’s billionaire production, he added.

The latest wealth calculations were made using share prices as of Jan. 15, Hoogewerf told AP, which means they took into account the 40% plummet in China’s stock market over the past half year, but not the latest drop on Feb. 25.

As turbulent as Chinese stocks have been, China has had more billionaires with companies listed on its stock exchanges than the US for four years in a row, the report said.

China’s richest man is property tycoon Wang Jianlin with $26 billion. Wang, 61, founder of Wanda, won back his top post from Alibaba’s Jack Ma and stayed there since August, when his wealth increased 52%, mainly driven by a ten-fold surge in the share price of his cinema chain after its IPO launch.

In 2015, 220 companies raised $152 billion through IPOs in China’s A-share market, up 136 % from the year before. The stock crash over the summer was may have, in fact, been sparked in part by the boom in IPO orders.

Because nearly every new listing in China is priced at a discount to its price to earnings ratio, IPOs are almost always guaranteed to attract investors and “pop” when they first list. China’s IPOs were oversubscribed by 130 times on average before regulators halted new offers in July of 2015, after the market crashed.

Investors need to put cash upfront to participate in a lottery to get IPO shares. These upfront deposits drew trillions of dollars out of the rest of the stock market, which may have contributed to its drop.

The biggest winners, though, were the founding shareholders, who are now among the ranks of China’s new billionaires.

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Author: Red

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