Capital raised by new listings in China will probably be more than $52 billion this year which is twice the figure forecast in January. Which seems to indicate that China could become the world’s leading center for share offerings this year.

The potential sums raised emphasize the huge liquidity in China’s domestic stock market. The other side of the coin is that if a mainland IPO is held in China then Hong Kong, London and New York will miss out.

This forecast for China IPOs was issued by PwC, the professional services firm. Richard Sun, PwC partner, said the firm expected capital raised by A-share listings in Shanghai and Shenzhen to total RMB400 billion ($52.6 billion) in 2007, up from a forecast RMB200 billion in January.

The flood of offerings is being driven by mainland companies’ rush to benefit from valuations on the soaring stock market. The main Shanghai index has trebled in the past 18 months.

An unnamed senior Hong Kong banker said, ‘This latest forecast is scary. Authorities in Hong Kong are going to have to work very hard to maintain the dominance and relevance of its bourse.’

US exchanges are particularly concerned that they are missing out on the flood of Chinese IPOs and have blamed US regulatory burdens for discouraging overseas companies.

In fact, the situation seems to be improving. In the year to June 5, there were 11 listings of China and Hong Kong-listed companies in the US, compared with just two in the same period last year although the sums raised were relatively small.

PwC said that A-share listings in China in the first six months of the year came to RMB169 billion, with an even stronger IPO forecast for the rest of the year.

Mainland China’s stock markets are largely out of bounds to foreign investors, whose holdings represent less than 1% of the market capitalization of all the stocks.
Source: Financial Times