According to a comprehensive report from Worldway Immigration: A recent analysis report on IPOs in mainland China and Hong Kong released by Deloitte points out that, despite downward pressure on the Chinese economy, the Hong Kong market has reached a new high in fundraising since 2011, while the mainland market has failed to meet market expectations. The report predicts that small and medium-sized IPOs will continue to follow one another in both markets before the end of 2014.
According to statistics, in the first 6 months of 2014, the Hong Kong market recorded a total of 48 IPOs, raising a total of HK$81.3 billion. More than half (53%) of the funds raised came from three large-scale IPOs: HK Electric Investments and HK Electric Investments Limited—SS, CNR Corporation Limited, and Harbin Bank, while the others mainly came from small and medium-sized IPOs. Therefore, Hong Kong ranks fourth in the global IPO market, closely following NASDAQ.
In contrast, after a 14-month suspension, new share issuance in mainland China resumed in January of this year. However, against the backdrop of the reform of the new share issuance system, the IPO market was suspended again from mid-February until it restarted at the end of June. Therefore, as of June 30, 2014, 52 companies had completed IPOs, raising a total of 35.3 billion yuan, a decline of 50% and 51% respectively compared to the 104 companies and 72.6 billion yuan raised in the same period in 2012. The slowdown in IPO issuance caused both the Shenzhen and Shanghai stock exchanges to fall out of the top five global exchanges for IPO fundraising.
The report expects that with the introduction of reform measures such as new urbanization, internet finance, domestic consumption, environmental protection, and the opening up of internet services, companies in real estate, retail, financial services, energy and resources, environmental protection, clean technology, and internet-related sectors will become the main force for IPOs in Hong Kong. Hong Kong is expected to compete with NASDAQ for the position of the world's third-largest IPO market in 2014.
At the same time, the number of companies conducting IPOs in the mainland market in 2014 will reach approximately 150. Based on factors such as market pressure, liquidity, and the continued reform of the IPO issuance system, there will be no large or mega IPOs within the year. Therefore, the total fundraising amount in the mainland market is expected to be 90-100 billion yuan, slightly lower than the 2012 level. Small and medium-sized IPOs from manufacturing, technology, media and telecommunications, and consumer/retail companies will be the main force in the mainland new share market in the second half of the year.
Source: Forbes China
