Chinese IPOs poised to raise $100bn

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Chinese companies are set to defy expectations and raise another $100bn next year through stock market listings, Ernst & Young has forecast.

Next year will again see large numbers of mainland companies list on domestic and overseas bourses in search of capital to fund expansion plans, according to the professional services firm.

This is in spite of the recent turnround in investor sentiment for Chinese stocks that has led some to perform badly on market debut. Shares in Sino­trans Shipping, Sinotruk and Anton Oilfields all ended down on their first day of trading in Hong Kong this month.

“Despite uncertainty, there is a strong pipeline of IPO-ready companies planning to list in 2008,” said Paul Go, E&Y partner.

E&Y predict that Rmb330bn ($45bn) will be raised from A-share listings in Shanghai in 2008 while a further HK$260bn ($33bn) will be raised from H-share listings in Hong Kong.

More than $20bn could also be raised by listings on the mainland’s smaller Shenzhen exchange and on bourses in London, Singapore and the US.

Shanghai this year raised more than $60bn from A-share listings, outstripping New York and London for the first time. Two-thirds of the total was via first-time domestic offerings by China’s largest companies – including PetroChina – that had previously listed overseas.

E&Y said the fall in the number of “returning home” Chinese offerings would be offset by the listing in Shanghai of “red chips”, Hong Kong-listed companies based on the mainland but incorporated overseas that have not yet been allowed to list domestically.

Rising numbers of privately owned companies are also tipped to join the stock market from sectors as diverse as property, retail and technology.

E&Y said 55 private mainland companies listed on exchanges in the US and Singapore this year, raising a combined $8bn.

“We expect the amount raised by mainland companies outside greater China to be similar to this year. Chinese companies will continue to list in the US now some of the regulatory issues have settled down,” Mr Go said.

Dealmakers also report that foreign-invested enterprises are considering listing Chinese assets on both the mainland and Hong Kong bourses.

Chinese authorities are studying reforms that will make it possible for multinationals to list in Shanghai. HSBC is among those signalling an interest in doing so.

Bankers say state-backed groups likely to come to market next year include infrastructure and finance as well as media.

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