PwC predicts IPO rebound

The number of initial public offerings (IPOs) in China's A-share market, the world's fourth largest stock market by market capitalization, is expected to rebound slightly in 2013 compared with 2012, accounting firm PricewaterhouseCoopers (PwC) said Monday.

"PwC is expecting 200 IPOs to raise 130 to 150 billion yuan ($20.87 to $24.08 billion) in 2013 by listing on the Shanghai and Shenzhen stock markets," Frank Lyn, managing partner at PwC China, said at a press conference in Beijing Monday.

He said the projection is based on the hypotheses that China's GDP will grow more quickly and the US quantitative easing policy will continue to positively affect China's capital market.

Buffeted by global economic uncertainties, market fluctuations and investors' cooling interest in IPOs under sluggish trading, the Shanghai and Shenzhen stock exchanges listed only 155 IPOs in 2012, with total funds raised at 108.3 billion yuan, down 45 percent and 62 percent respectively from 2011 and around one-third of the levels seen in 2010.

By the end of 2012, China's A-share market - composed of the Shanghai and Shenzhen stock exchanges - ranked fourth in global exchanges with market capitalization of 21.15 trillion yuan, after the New York Stock Exchange, the NASDAQ, and the London Stock Exchange.

PwC also forecast that 80 new IPOs would list in Hong Kong this year, including 65 on the Main Board and 15 on the Growth Enterprise Board, with total funds raised of HK$120-150 billion, a significant growth compared with 2012.

"We expect that more mainland-based small and medium-sized enterprises will be listed in Hong Kong following the relaxation of listing requirements for (Hong Kong's) H shares and the beginning of the conversion of B shares into H shares," said Edmond Chan, a PwC capital market services group partner.

The mainland A-share market's long waiting time and tightening regulations will prompt some IPO applicants to turn to other markets such as Hong Kong, Sun Jin, an assurance partner at PwC China, told the Global Times.

Currently more than 800 applicants are waiting for the approval of China's securities regulator to get listed on the A-share market.

Financing costs for listing on Hong Kong's H-share market are higher than for the A-share market, but the waiting time for an applicant to get listed is much shorter - one to two years compared with five to six, PwC's experts said.

The China Securities Regulatory Commission issued a new guidance on overseas listings in late December, aimed at diverting the long waiting list of IPO applicants from the A-share market to the overseas market including the H-share market.

The new guidance, effective since January 1 this year, canceled some strenuous thresholds for overseas listings - such as a requirement that applicant companies have at least 400 million yuan of net assets, 60 million yuan of net profits, and the ability to finance at least $50 million overseas.