Hong Kong Bourse Sees `Good' Initial Offering Pipeline Amid Europe Concern

Hong Kong Exchanges & Clearing Ltd., operator of Asia’s third-biggest bourse, says Agricultural Bank of China Ltd. is one of many companies in a “good” pipeline for listings in the city even as Europe’s debt crisis spreads.

The bourse approved 67 applications for initial public offerings in Hong Kong in the three months to the end of March, said Ronald Arculli, chairman of Hong Kong Exchanges. Agricultural Bank, the nation’s third-largest lender by assets, plans to attempt what could be the biggest IPO in world history by July, people with knowledge of the matter said this month.

Hong Kong’s IPO pipeline “looks good for the rest of the year, but Europe is a bit of a worry,” Arculli said in a Bloomberg Television interview today. For Agricultural Bank, “apart from anything else, market timing has got to be an issue as well. We obviously hope it will be in the second quarter, but companies have their choice,” he said.

Standard & Poor’s cut Spain’s credit rating one step to AA yesterday, and said the outlook on the country is negative. The company also lowered Greece’s credit rating to junk, and reduced Portugal’s to the third-lowest investment grade this week.

Hong Kong Exchanges has been stepping up efforts to attract listings of companies from overseas, with United Co. Rusal Ltd. being the first from Russia to offer shares in the city. The bourse expects five to 10 Russian companies to seek listings in the “next couple of years,” Arculli said Feb. 18. BNP Paribas SA said April 21 that it’s in talks with a Russian company about a potential IPO in Hong Kong.

The stock exchange has also had discussions about potential listings with companies in Australia, Japan, Korea, Mongolia, Taiwan, the U.K. and Vietnam in 2009, it said last month.

Brazilian companies, including one that’s engaged in the natural resources business, may seek listings in Hong Kong, Arculli said. He declined to be more specific.

“The encouraging thing is they concluded that Hong Kong will be the best venue” for overseas listing, Arculli said.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net

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