| Funds raised through IPOs will hit RMB480 billion in 2008, says PricewaterhouseCoopers |
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Beijing, 3 Jan 2008 - 2007 was a record breaking year for IPO activities in the Chinese capital market. This momentum will continue in 2008 with total funds raised through IPOs expected to hit RMB480 billion in 2008, predicted PricewaterhouseCoopers (PwC) today at its "IPO Market Year End Review for 2007 and Outlook for 2008" press briefing.
The coupling effect of ample liquidity and return of H-share companies on A-share market took the total IPO funds raised in Shanghai and Shenzhen stock exchanges to RMB477.1 billion, a significant rise of 256% compared to the same period in 2006. The total number of IPOs in the two stock exchanges was 125, up 92%. Both figures are new all time highs. In addition, the total IPO funds raised in Shanghai Stock Exchange topped that of any exchange worldwide. The aggregate IPO amount for China, including Shanghai, Shenzhen and Hong Kong, has exceeded that of the United States (NYSE, Nasdaq and AMEX).
Out of the 125 IPOs in 2007, 12 of them were A-shares issued by H-share companies listed on the Hong Kong Stock Exchange, accounting for 68% of the total IPO funds raised.
"Although return of H-share companies' accounted for 70% of the total IPO funds raised, the IPO funds raised by other mainland companies was RMB154.9 billion in 2007, compared to RMB92.3 billion in 2006, an increase of 68%. This was driven by the rapid development of the mainland companies and consistent economic growth of the China economy. We expect this trend will become more prominent in the future, "said Charles Feng, PricewaterhouseCoopers Beijing Office Lead Partner.
"We see this momentum continuing in 2008 although most of the H-share companies have already listed in the A-share market. The market is looking forward to the next cycle led by the A-share listings of the red-chips listed on the Hong Kong Stock Exchange. Moreover, we expect more mainland companies will list on the A-share market. If the Hong Kong listed red-chips are granted a green light for their A-share issues in 2008, the total IPO funds raised in the Shanghai and Shenzhen capital markets are expected to reach RMB480 billion," said Frank Lyn, China Markets Leader of PricewaterhouseCoopers.
In 2007, share prices of all Shanghai and Shenzhen newly listed achieved outstanding performance with 98% of them recording over 50% increase on the first trading day as compared to their offering prices. 52% of the newly listed companies on the Shanghai Stock Exchange achieved a P/E ratio of more than 30 times while the figure for 2006 was just 8%.
"We believe the fundamentals of the Chinese capital market will remain conservatively optimistic in 2008. However, we need to keep an eye on a number of macro- and micro-economic impacts. The central bank has raised the reserve ratio a number of times in 2007 as one of the austerity measures. This will cast an impact on market liquidity. Externally, the impacts from the U.S. sub-prime market and the fluctuation in the regional equity markets should also be considered. However, we believe the Chinese capital market will continue to grow in a stable and healthy way. In order to exploit the rapid economic growth, more and more Hong Kong listed H-shares and red-chips will seek listing opportunities in the A-share market. Meanwhile, we believe there will be a lot of mainland companies taking advantage of the positive sentiment of the capital market and to issue A-shares. Among all, financial services, minerals and energy, telecommunications, retail and consumer goods related companies will be in the spotlight of IPO activities in 2008," Frank concluded. |
