Greater China boosts IPO activities, survey finds
By Ren Feng (China Business Weekly)
Updated: 2004-05-18 14:38

China surpassed European markets and narrowed the gap with the United States in terms of funds raised through initial public offerings (IPOs) during the past two years, indicates a report released last week by PricewaterhouseCoopers.

Chinese firms last year raised US$13.93 billion through IPOs, the report indicates. That was 27 per cent less -- but an improvement from past years -- than US firms.

But Chinese firms raised more money through IPOs compared with European firms in each of the last two years.

A majority of the IPO funds raised in China over the past two years came from the Hong Kong and Shanghai stock exchanges, the report indicates.

The Hong Kong Stock Exchange had the most IPOs, at 278, in the last three years, followed by Shanghai, 215; Taiwan, 199; and Shenzhen, 1.

The single greatest impact on worldwide markets in the past three years was the September 11, 2001, terrorist attacks on New York and Washington.

Shenzhen's stock exchange has been inactive, in terms of IPOs, since 2001.

However, the markets quickly recovered in 2002, when both the Hong Kong and Taiwan exchanges achieved greater successes.

Edmond Chan, a partner in the Capital Market Services Group of PricewaterhouseCoopers, said: "It is encouraging to see the Hong Kong Stock Exchange remains the international fund-raising platform for China's enterprises, while the Shanghai Stock Exchange serves as the principal fund-raising platform in the Chinese mainland.

"Funds raised through IPOs on the Taiwan Stock Exchange represented only a small portion of the total IPO funds raised, as many of these enterprises raised funds in the over-the-counter market prior to their IPOs."

The survey also indicated the average IPO size in China increased 67 per cent last year compared with 2001.

According to Richard Sun, a partner at PricewaterhouseCoopers, "Over the last three years, the capital markets in China were affected by negative external factors, such as 9/11 and SARS (severe acute respiratory syndrome). However, we saw a quick recovery in the latter part of 2003."

The survey indicates the amount of new money raised through IPOs in both the US (NASDAQ and NYSE) and European markets, including exchanges in the 15 EU member states plus Switzerland and Norway, has decreased over the last three years.

However, the China market showed a year-on-year increase of 27 per cent, from US$10.62 billion in 2001 to US$13.51 billion in 2002, in new money raised.

The China market increased an additional 3 per cent (US$13.93 billion) last year.

The survey's findings are based on the volume and value of IPOs in China's principal stock markets.

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