Hong Kong is poised to become the world’s hottest IPO market in 2010, raising more than US$51 billion. Observers, however, say its stock exchange must reduce its heavy reliance on China.
According to figures from Dealogic, the city was outperforming Shanghai, Shenzhen and New York by early December, the second consecutive year that it has led the world in IPOs.
Dealogic said the US$31.39 billion fund-raising bid of New York fell behind Hong Kong’s total, with Shenzhen and Shanghai lagging behind Wall Street.
“It’s definitely an achievement – Hong Kong can claim to be both an international financial centre and a gateway to mainland China,” said Liu Qiao, an associate business professor at Hong Kong University, in an interview with AFP.
“It’s a very good platform for Chinese companies to tap international capital, something that would be hard for Shanghai to catch in the short term.”
However, Hong Kong’s windfall this year, surpassing the over US$30 billion it raised in 2009, was mainly attributed to huge share sales by Asian insurer AIA and Agricultural Bank of China, which raised US$20.5 billion and US$22.1 billion, respectively.
“Now, all the major banks in China have listed. The only thing left are the electricity utilities and maybe the railways,” said Francis Lun, general manager of Hong Kong’s Fulbright Securities. “It will be difficult to occupy the crown three years running.”
Hong Kong’s growth in recent years is mainly due to the wide-scale move of Beijing to privatise state-owned enterprises, many facing questionable balance sheets and crippling debt.
“Hong Kong has benefited from these policies and this wave still continues for now, but you can’t tie yourself to the mainland Chinese market,” said Mr. Liu.
The exchange has attracted some foreign companies including UC Rusal, the largest aluminium producers in the world, which listed in January after it raised US$2.2 billion.
Cosmetics group L’Occitane also raised US$704 million in May, becoming the first French company listed in Hong Kong, while Brazilian mining giant Vale listed earlier this month, though it did not raise new money.