CHINESE IPO’S – SURGING AHEAD

Posted on July 15, 2010 at 9:07 PM


Hong Kong is presently the world’s largest IPO center. However, latest reports from Ernst & Young and PricewaterhouseCoopers (PwC) predict that China is well on its way towards leading the IPO market.

From 2000 to June 2010, companies in China’s mainland raised $188 billion in 495 deals on the leading bourses such as New York Stock Exchange (NYSE), Nasdaq Stock Market, London Stock Exchange and Hong Kong Stock Exchange. Overall, there were 1,114 global deals raising $366 billion in the same period. Hong Kong Stock Exchange was ranked first with 409 deals raising $171.2 billion.

In the near future, PricewaterhouseCoopers (PwC) predicts that domestic PRC companies are expected to raise US$55.7 billion on the Shanghai Stock Exchange this year, while in Hong Kong the figure is expected to be US$47.7 billion.

It can be deduced that the Chinese companies are recovering from the worldwide economic slump and have not been adversely affected by the Europe debt crisis. In terms of fund raising, more Chinese companies choose domestic capital markets as they have become increasingly attractive compared with foreign markets. Domestic companies have raised RMB213bn from 176 IPOs in the first half of the year, more than the RMB187bn raised in the whole of 2009. And according to PwC’s predictions, the total number of new listings on the country’s two bourses in Shanghai and Shenzhen may reach 300 in 2010, compared to 99 last year. Unlike other countries, China has high investor confidence due to increasing listing value and the strict regulations of the China Securities Regulatory Commission (CSRC).

Companies in the BRIC (Brazil, Russia, India and China) countries constituted nearly 68 percent of the total funds raised in the past decade. London stock exchange, NYSE and NASDAQ were ranked second, third and fourth respectively in the report.


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