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BIZCHINA> Top Biz News
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Hong Kong equity issuance is expected to return to 2007 levels
(China Daily/Agencies)
Updated: 2009-11-16 07:56 Equity issuance in Hong Kong could return next year to the heady levels of 2007, with a strong line-up of hopeful listings already taking shape, a senior Bank of America-Merrill Lynch banker said. After a big pick-up in share offerings in the past few months, especially by Chinese property companies, the wave of companies looking to come to market next year will likely be broader and more global, said Jason Cox, head of Asia-Pacific equity capital markets for Bank of America - Merrill Lynch. "The strong deal flow at the moment is a pretty good indicator of what the pipeline looks like," Cox said. "There is the expectation that the pipeline will be similar to 2007." More than $38 billion was raised in an IPO frenzy in Hong Kong in 2007. That slumped to $8.5 billion last year as the global financial crisis took root, and Cox said issuance was running now at about half its 2007 pace. Companies rushed to dust off their pitch books as the Hong Kong market roared back to life earlier this year, but jitters set in again when a series of IPOs tumbled upon listing. Earlier this month, Chinese developer Excellence Real Estate Group Ltd shelved plans for a share offering and Mingfa Group, another Chinese property firm, revised down its expected IPO price range.
A dose of exuberance returned to Hong Kong listings this month, most emphatically in a 34.3 percent rise in Chinese developer Evergrande Real Estate on Nov 5, its first day of trading. Bank of America-Merrill Lynch and Goldman Sachs were joint sponsors of the Evergrande IPO. Cox said the first quarter next year would be relatively quiet as firms prepare for listings, paving the way for more frenetic second and third quarters. "We have had many conversations with international issuers who have a rationale for being listed in Hong Kong," he said, adding that an IPO last month by Wynn Macau, the Asian arm of US casino giant Wynn Resorts, could be the tip of the iceberg. Bank of America-Merrill Lynch has an 11 percent stake in China Construction Bank, China's second-largest bank, but lacks a securities joint venture that would allow it to underwrite IPOs in the Chinese mainland stock market. Some of its competitors such as Goldman Sachs and UBS have such partnerships, although the IPO underwriting business in Hong Kong still dwarfs that of Shanghai for foreign banks. "When the time is right, we are very keen to expand our business in China," Cox said. "For all the international banks, and we are no different, this market is an absolute key focus for us in the region." (For more biz stories, please visit Industries)
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