INTERNATIONAL BUSINESS
Tuesday, May 11, 2004
China IPOs may touch $20bn in '04, surpass US
REUTERS
HONG KONG: Funds raised from Greater China IPOs could reach $20 bn in '04 and surpass the total raised on US bourses, a leading accounting firm said on Monday.
But capital-hungry Chinese firms seeking new listings face hurdles such as Beijing's efforts to cool its economy and a slump in Chinese shares listed in Hong Kong on Monday.
Stock exchanges in Hong Kong, Shanghai and Taiwan are set to host $20-bn worth of initial public offerings this year, up from $13.9bn in '03, PricewaterhouseCoopers (PwC) said.
That could put the region ahead of the US where the value of IPOs on the New York Stock Exchange and the Nasdaq market totalled $17.7bn last year, down 30% from '02 and 57% from '01.
"Hong Kong's new listings have been boosted by restructuring at Chinese state-owned enterprises and US and European markets clearly lack this kind of contribution," said Edmond Chan, a partner at PwC in Hong Kong.
But investor sentiment towards China stocks has weakened on concerns about China's efforts to cool its economy, leading to a slowdown in primary share offerings in recent weeks. Hong Kong's blue-chip Hang Seng Index fell 3.6% on Monday, breaking below the 12,000 mark and registering its biggest daily drop since October.
Chinese chip maker CSMC Technologies Corp, eyeing a Hong Kong listing by end-June, may nearly halve its IPO size, sources said. China Construction Bank has said its IPO, which could raise up to $10 bn, will take place later this year or early next. If China Construction Bank does list this year, the total raised by Chinese firms could reach $27bn, including listing in the US, according to Reuters calculations.
PwC expects companies to raise $12.8 bn from new listings in Hong Kong this year, which would be a 70% jump from '03.
The accounting firm expects China's financial sector to be a main driver of deals, with at least one $2-3 bn offering set to be completed. In the first four months of this year, Hong Kong attracted 14 listings on the main board and 10 on the second board, raising a total of $3.5 bn.
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