Stocks News
- Shanghai likely to beat HK in IPO fundraising
Date: 4-Jan-2007 Sources: (Shenzhen Daily)
THE Shanghai Stock Exchange may attract US$26 billion in fundraising this year, overtaking Hong Kong, as more of the nation's largest companies sell shares domestically, PricewaterhouseCoopers LLP said in a report yesterday.
Hong Kong is expected to receive HK$150 billion (US$19.3 billion) in initial public offerings (IPOs) in 2007, PricewaterhouseCoopers said, without giving comparative figures.
The mainland's stock market capitalization more than doubled last year to US$953 billion, as the government encouraged the country's biggest companies including Industrial and Commercial Bank of China Ltd. and Bank of China Ltd. to sell shares, reviving investor demand after a four-year slump.
Companies raised HK$325.4 billion in Hong Kong last year, according to an Ernst & Young LLP report yesterday, making the city the largest in the world for first-time share sales, ahead of London and New York.
This included US$16 billion by Industrial and Commercial Bank of China, the country's largest bank, which sold shares in Hong Kong as part of the world's largest initial public offering. The bank raised US$22 billion in total, including US$6 billion in a simultaneous A-share offering in Shanghai.
Ernst & Young also forecast Shanghai's fundraising would beat Hong Kong's in 2007, for the first time in six years. Total initial public offering proceeds are expected to reach 280 billion yuan, slightly more than in Hong Kong, said Paul Go, head of Ernst & Young's risk and advisory services in Hong Kong and on the mainland, without providing an exact forecast for the city.
The government has pushed companies such as Industrial and Commercial Bank of China and Bank of China to sell shares in Shanghai as well as Hong Kong to help develop the domestic capital markets, improve corporate governance and increase investor choice. The nation lifted a 12-month ban on share sales in May.
Bank of China raised US$11.2 billion in Hong Kong in July, four weeks before a 20 billion yuan share sale in Shanghai.
Unlike Hong Kong initial share sales, only selected foreign investors can purchase shares sold in Shanghai.
Hong Kong has for years been the preferred listing venue of mainland companies trying to tap stock markets for funds to expand, diversify their shareholder base and raise their international profile.
Last year, mainland companies accounted for over 90 percent of the funds raised through first-time share sales in Hong Kong, according to Edmond Chan, a Hong Kong-based partner of PricewaterhouseCoopers' capital market services group.
The market value of Hong Kong-quoted shares of mainland companies swelled to HK$5.45 trillion by the end of November last year, accounting for nearly 45 percent of the local market, Hong Kong stock exchange data showed.
The Shanghai and Shenzhen 300 Index gained 121 percent last year, dwarfing the 94 percent surge in the Hang Seng China Enterprises Index, which tracks 37 State-owned mainland companies listed in Hong Kong, and the 34 percent rise in the benchmark Hang Seng Index.
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