The US IPO market used to be the largest of its kind in the world up until 2009 when the Chinese IPO market took over the title. In 2011, despite the fact that Chinese stock markets had a worse year compared to those in the US, the Chinese IPO market managed to hold on to its title. According to a news story in the Financial Times (see the bibliography below), firms that went public in China raised a total of $73 billion, which is almost double the amount raised by IPO firms in the US. What are the factors that pushed the Chinese IPO market ahead of the US one? Below are a few, which I think played a role in the rise of the Chinese IPO market: 1. The trendiness of the IPO market in China: Stock exchanges have been in existence in the US for 2 centuries now. Whereas the two major stock exchanges in China have been operating only for about 10 years. This means that stock markets are still a new thing in China and they attract huge interest from a long backlog of private firms wanting to float shares in these markets, and from Chinese people eager to invest in shares of IPO firms. In other words, in China, the IPO market is in trend at the moment. 2. The economic growth in China: In the last 2 decades, the Chinese economy grew many times faster than the US one. Growth requires investment and an IPO provides private firms the ideal mechanism to obtain funds to finance their investments. The result, of course, is a much higher amount of proceeds raised in China compared to the amount raised in the US. 3. The NASDAQ Bubble and the Sub-prime Mortgage Crisis: The burst of the NASDAQ Bubble in 2000 and the Sub-prime Mortgage Crisis of 2007-2008 both had a severe impact on the US IPO market by causing a sharp decline in IPO activity. The IPO markets in China were much less affected by these events, which shook the markets in the US. 4. Sarbanes-Oxley Act of 2002?: Some market participants have been arguing that this act had a negative impact on IPO activity in the US. The basic argument is that compliance with it results in an extra cost of being public in the US and reduces a firm's likeliness of conducting an IPO in the US. I haven't researched on this topic, but I can't see this factor as having a first-order effect on a firm's IPO decision. The four factors above are probably not totally independent from each other; and there are probably more factors that helped the Chinese IPO market to become the world's largest. But, I guess these factors provide enough reasons for the rise of the Chinese IPO market. How long the Chinese IPO market will remain the world's largest is difficult to say, but it is quite likely to keep its title at least for a few more years to come. Bibliography Cookson, Robert, and Gregory Meyer, 2011, China eclipses US as top IPO venue,Financial Times