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IPOs slump in China in 2012
By Kim Young-gyo
HONG KONG, Jan. 2 (Yonhap) -- China saw a decline in the number of initial public offerings (IPOs) last year amid global economic uncertainties, a study found Wednesday.

   Professional services organization Deloitte Touche Tohmatsu said mainland China's two exchanges in Shenzhen and Shanghai recorded 154 new listings in total, an on-year decrease of 45 percent. The two exchanges raised 103.4 billion yuan (US$16.6 billion) collectively, marking an on-year decline of 63 percent.

   Hong Kong, China's offshore market, recorded 62 IPOs, raising HK$89.9 billion (US$11.6 billion), down 31 percent and 67 percent from 2011 respectively.

   Deloitte said the market sentiment was hammered by the credit downgrade of the eurozone countries, China's gross domestic product cut and slower-than-expected U.S. economic recovery.

   "Although Hong Kong had two mega IPOs from Haitong Securities and the People's Insurance Company of China, its proceeds still lagged behind those of the Tokyo Stock Exchange, which had the re-listing of Japan Airlines, the second largest IPO worldwide in 2012," said Edward Au, co-leader of National Public Offering Group of Deloitte China.

   "Without any heavyweight listings, the IPO funds raised by the two exchanges in Shenzhen and Shanghai shrunk significantly on-year. As a result of lower valuation for A-share IPOs stemming from market transformation and weak corporate earnings, their respective IPO proceeds can only trail those of Hong Kong."

   Based on proceeds raised in initial public offerings in 2012, Hong Kong was the fourth largest listing venue in the world, compared to first place a year earlier.

   Shenzhen immediately followed in the fifth place, while Shanghai ranked ninth.

   Au expressed his cautious optimism toward the outlook for Hong Kong's IPOs in 2013, citing the "go global" strategy of mainland companies and China's economic plan for financial sector development and reform as the main drivers of the moderate rebound of IPO activities.

   "In 2013, Hong Kong has a strong potential to become on of the top three global IPO venues again. We think the recent relaxation of the Hong Kong listing requirements for mainland companies will spur some of the mainland IPO applicants to switch to list on the Main Board of Hong Kong," he said.

   ygkim@yna.co.kr
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