The Greater China capital markets reached their new height in 2007. The number of new listings, the amount of funds raised, the market capitalisation and the volume of trading activities all grew significantly in 2007.
In 2007, there were a total of 242 IPOs in Greater China with gross funds raised amounting to USD104.0 billion, as compared to 140 IPOs raising USD62.0 billion in 2006. In each of the past two years, the aggregated amount of funds raised from IPOs in Greater China exceeded the aggregated amount of funds raised from IPOs in the United States (New York Stock Exchange, NASDAQ and AMEX) and the United Kingdom (Main Market and AIM). The average deal size in Greater China in 2007 was USD0.43 billion, which was higher than that of USD 0.22 billion in the United States, USD0.17 billion in the United Kingdom and USD0.14 billion in Europe.
These achievements of the Greater China markets in 2007 were partly due to the IPOs of a number of H-share companies (being Mainland China companies listed on the Hong Kong Stock Exchange) and the "return" of H-share companies to list in the A-share market in Mainland China. In 2006, five H-share companies listed A-shares, raising funds of USD5.4 billion; while in 2007, 12 H-share companies launched their A-share listings with funds raised amounted to USD44.1 billion, representing 42.4% of the total IPO funds raised in Greater China in 2007.
Looking ahead, the strong economic performance in China and the positive sentiment in China towards the hosting of the Olympic Games in August 2008 are some of the encouraging factors attributing to the stable growth of the Greater China capital markets. However, this growth potential may be underpinned by the impacts from the sub-prime mortgage lending crisis in the United States which started in late 2007, the known and potential credit crunch of major international financial institutions, the potential slow down of the US economy, the significant fluctuation in the global equity markets in the first quarter of 2008, and the potential austerity measures prompted by inflationary pressure in Mainland China.
With the strong fundamentals of the Greater China capital markets, we are conservatively optimistic about the IPO activities in 2008. We believe Hong Kong listed H-share companies will continue seeking listing on the Shanghai Stock Exchange or the Shenzhen Stock Exchange by issuing A-shares, and Hong Kong listed red chip companies will start seeking issuing and listing of their shares in the A-share market when such opportunity arises.
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