China still leading world in IPOs but funds plunge
By Feng Jianmin and Louise Ho |
00:57 UTC+8 December 22, 2011
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Print Edition
Print Edition
China will remain the world's No. 1 market for initial public offerings this year against weaker Western bourses, but more than four-fifths of Chinese investors have lost money in the process, according to industry reports.
Chinese exchanges, including those in Hong Kong and Taiwan, are heading for the completion of 410 deals this year with US$79.3 billion raised, a 42 percent drop in funds raised compared to 2010, according to a report released yesterday by Ernst & Young.
The global IPO value is estimated to be 40 percent down, at US$170 billion, by the end of this year.
"China has been a key driver in the IPO resurgence in the days following the global recession," said Yuan Yongmin, an Ernst & Young partner. "In 2010, China exchanges led the world in bringing new companies to market, this trend continued in 2011 with the Hong Kong stock exchange, the Shenzhen Stock Exchange and the Shanghai Stock Exchange among the top five exchanges by capital raised."
The largest IPO in China exchanges was the US$10 billion listing of Glencore International on the Hong Kong bourse, followed by Prada SpA, a US$2.5b listing in Hong Kong.
Those made the Hong Kong bourse on a par with the New York Stock Exchange as the world's largest markets in terms of funds raised through IPOs.
The Shenzhen Stock Exchange based in southern China is set to be the world's most active IPO market for the second year in 2011, the report said.
However, it was not a good year for investors on Chinese mainland, and government officials in the financial sector have noted the need for reform in new shares issuance.
A survey found that 87.2 percent of stockholders suffered losses in the stock market this year, with the Shanghai Composite Index slumping 22 percent and the Shenzhen Component Index 29 percent so far compared to last year's close.
The losses incurred were in the growth enterprise market, according to a survey by the China Securities Journal.
The tumbling stock market greatly affected investors' returns. Six percent of respondents said the stock they own had lost over 70 percent of its value, and around 15 percent said their stock was down 50 to 70 percent.
An overwhelming number of respondents (86.6 percent) said they were "very dissatisfied" with the stock market's performance.
The survey also found almost 80 percent of them forced to keep the stock for over six months. Only 16.8 percent said they were keeping stock as a long term investment.
Next year, 48.8 percent said they would choose to sell all their stock.
Fang Xinhai, director of the Shanghai Financial Services Office, said the pace of reform on new share issuance should be speeded up.
"Share issuance price has to be lowered because the current price level is too high," he told a forum yesterday. "We should also make capital market allocation more efficient as some companies cannot get capital that is important to their development."
He added: "We should open the area of agency services institutions for more competition and attract more securities and foreign companies. In this way we can ensure a vibrant securities market," he said.
Chinese exchanges, including those in Hong Kong and Taiwan, are heading for the completion of 410 deals this year with US$79.3 billion raised, a 42 percent drop in funds raised compared to 2010, according to a report released yesterday by Ernst & Young.
The global IPO value is estimated to be 40 percent down, at US$170 billion, by the end of this year.
"China has been a key driver in the IPO resurgence in the days following the global recession," said Yuan Yongmin, an Ernst & Young partner. "In 2010, China exchanges led the world in bringing new companies to market, this trend continued in 2011 with the Hong Kong stock exchange, the Shenzhen Stock Exchange and the Shanghai Stock Exchange among the top five exchanges by capital raised."
The largest IPO in China exchanges was the US$10 billion listing of Glencore International on the Hong Kong bourse, followed by Prada SpA, a US$2.5b listing in Hong Kong.
Those made the Hong Kong bourse on a par with the New York Stock Exchange as the world's largest markets in terms of funds raised through IPOs.
The Shenzhen Stock Exchange based in southern China is set to be the world's most active IPO market for the second year in 2011, the report said.
However, it was not a good year for investors on Chinese mainland, and government officials in the financial sector have noted the need for reform in new shares issuance.
A survey found that 87.2 percent of stockholders suffered losses in the stock market this year, with the Shanghai Composite Index slumping 22 percent and the Shenzhen Component Index 29 percent so far compared to last year's close.
The losses incurred were in the growth enterprise market, according to a survey by the China Securities Journal.
The tumbling stock market greatly affected investors' returns. Six percent of respondents said the stock they own had lost over 70 percent of its value, and around 15 percent said their stock was down 50 to 70 percent.
An overwhelming number of respondents (86.6 percent) said they were "very dissatisfied" with the stock market's performance.
The survey also found almost 80 percent of them forced to keep the stock for over six months. Only 16.8 percent said they were keeping stock as a long term investment.
Next year, 48.8 percent said they would choose to sell all their stock.
Fang Xinhai, director of the Shanghai Financial Services Office, said the pace of reform on new share issuance should be speeded up.
"Share issuance price has to be lowered because the current price level is too high," he told a forum yesterday. "We should also make capital market allocation more efficient as some companies cannot get capital that is important to their development."
He added: "We should open the area of agency services institutions for more competition and attract more securities and foreign companies. In this way we can ensure a vibrant securities market," he said.
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