The average amount of money raised for every initial public offering (IPO) in the mainland, Hong Kong and Taiwan surpassed European and US markets last year, according to research by accountants PricewaterhouseCoopers.

 

The average amount of money raised per IPO surged to US$260 million in 2005, up from US$83 million in 2004, an increase of 214 percent.

 

The figure exceeded the combined average amount raised on the NASDAQ and the NYSE in the United States, which dropped to US$170 million last year from US$220 million in 2004.

 

"China's sound and steady economic growth continues to attract international funds into the capital markets in the region," said Frank Lyn, China market leader at PricewaterhouseCoopers.

 

"Besides, the decision of some mega-sized mainland enterprises to list in Hong Kong, instead of considering a dual listing in other overseas exchanges, also contributed to the increase."

 

In terms of the total amount of new money raised through IPOs, however, the US markets, Nasdaq and NYSE, and European markets, including exchanges in the EU plus Switzerland and Norway, were ahead of the whole Chinese market in 2005.

 

IPO funds raised in the Chinese mainland, Hong Kong and Taiwan last year amounted to US$25.57 billion, which was 43 percent of the US$60 billion raised on European markets.

 

It was also 79 percent of the US$32.08 billion raised on US markets.

 

According to Edmond Chan, a partner at Pricewaterhouse Coopers Capital Market Services Group, the mainland's resumption of new IPOs in the second half of this year will have a very limited impact on the listing frenzy in Hong Kong.

 

"Companies choosing Hong Kong to launch their IPOs aim to attract more international investors and improve their publicity in the international arena," Chang added.

 

"Due to its well-established financial and legal systems, geographical proximity to the mainland and good corporate governance standards, the Hong Kong stock market continues to be seen as the major international fund-raising platform by mainland enterprises."

 

Among the total amount of money raised through IPOs in the Chinese mainland, Hong Kong and Macao, about 97 percent of the money was raised in Hong Kong.

 

This was the world's fourth largest fund-raiser in 2005.

 

The number of new listings in Shanghai and Shenzhen decreased, mainly as a result of share segregation reform in the Chinese mainland.

 

Only three IPOs in Shanghai and 12 in Shenzhen were seen in the first half of 2005, and there were none in the second half of the year.

 

Looking ahead to the next 12 months, Lyn estimated that money raised through new IPOs in Hong Kong would likely reach a record high of HK$200 billion (US$25.6 billion) raised this year with the projected average price per earnings hovering at around 10 to 15.

 

"We expect to see sizeable and quality listings in 2006," said Lyn.

 

"There is a strong pipeline of companies with powerful financials, with the major force coming from mainland-based financial services and logistics companies."

 

(China Daily May 12, 2006)