IPO volume and sums drop

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The funds raised in initial public offerings (IPOs) on China's capital market may reach 400 billion yuan ($61.9 billion) this year, down 16 percent from 2010 because of economic uncertainties both at home and abroad, PricewaterhouseCoopers (PwC) said on Monday.

"Despite the decrease in China's IPO market activity in the first six months this year, we believe the momentum remains robust for 2011, due to high confidence in the growth of China's economy and domestic demand," said Jean Sun, a partner at PwC China.

"Other factors, such as the large amount of capital and limited investment channels, will also help to stimulate the market," she said.

The number of IPOs and amounts raised on the Shanghai and Shenzhen stock exchanges in the first half of 2011 both dropped from the same period last year, according to PwC's report on the IPO market interim review and outlook for 2011.

Looking back on the first six months of 2011, the Shanghai and Shenzhen stock exchanges had 168 IPOs, raising 176.3 billion yuan, a year-on-year decrease of 5 percent for Shanghai and 18 percent for Shenzhen.

However, ChiNext remained robust in the first half of 2011, with 83 new listings, a year-on-year increase of 54 percent, amounting to 57.2 billion yuan raised, a 25 percent increase.

Meanwhile, Hong Kong continues to consolidate its position as a major international listing hub. During the first six months of 2011, it saw a 264 percent increase in funds raised, with a value of HK$183.7 billion ($23.61 billion).

PwC predicted that the leading industries of China's IPO market in 2011 will be manufacturing, information technology, financial services, as well as retail, consumer goods and services.

In 2010, manufacturing dominated the capital market in new listings on the Shanghai exchange (58 percent) and ChiNext (46 percent).

On the Shenzhen SME Board, retail, consumer goods and services (41 percent) ranked No 1, overtaking manufacturing (39 percent) in the first half of 2011.

"The P/E ratio of Shanghai A-shares and Shenzhen SME Board IPOs will remain in the range of 40 to 60 this year," said Frank Lyn, a markets leader at PwC China.

According to Lyn, investors' long-awaited international board is not likely to be launched this year, as industry regulators still need time to refine the rules and operational details.

Meanwhile, more than 50 percent of companies in the first half year saw their share price fall beneath the IPO price in the first day of trading, a much higher percentage than during the same period last year.

"The phenomenon, in fact, indicated that China's capital market is becoming more mature," said Sun.