China – Brokers: Potential IPO Renaissance Could Trigger Select Re-rating

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China – Brokers: Potential IPO Renaissance Could Trigger Select Re-rating

EW 20.00 30.00 -33% 19.67 2% 3.00

CMS 600999.SS UW 14.80 15.00 -1% 17.05 -13% 0.88

brokers' earnings rebound can be sustained. IPOs are important not only because of Galaxy 601881.SS UW 11.20 14.70 -24% 12.49 -10% 0.78

underwriting fees but also because they introduce new assets that attract new fund Source:May 2026Morgan Stanley Research estimates. Note: Closing prices as of 20

flows, which brokers can monetize through commissions, trading, margin, and asset

management.

We believe the conditions are ripe for a strong comeback of A-share IPOs in the

next 6-12 months... Global competition is increasing – capital and talent intensity is

surging in areas such as AI models, chipmaking, renewable energy, and commercial

aerospace. We think the A-share market could be leveraged to further strengthen

China's existing competitiveness in supply chains and to help companies innovate

and scale. Importantly, a healthy pace of IPO fundraising would feed into a positive

loop with the primary market, where we're observing a notable pickup in 2026 in

investments in AI and humanoid companies, mimicking the trends in the US.

The stack-up of larger primary market deals is an early indicator of a large IPO

pipeline for A- and H-shares. After analyzing companies that filed for A-share IPOs

and those in the consultation stage, we estimate that Rmb250-300bn in funds

could be raised over the next 12 months. The largest deals focus on memory makers,

chipmakers, renewable energy, robotics, etc. We expect the fundraising to be met by

Morgan Stanley does and seeks to do business with

growing interest from the secondary market in these sectors – as well as elevated companies covered in Morgan Stanley Research. As a result,