As many as 20 Chinese companies plan initial public offerings in Hong Kong by year-end and more non-state businesses are preparing to follow government-owned peers to seek listings, an executive of the city’s exchange said.
While about 110 companies are seeking approval to list their shares and about 40 have permission to go ahead, between 10 and 20 firms, mostly from the mainland, are likely to complete IPOs by Dec. 31, said Lawrence Fok, chief marketing officer for the Hong Kong Exchange and Clearing Ltd. Hong Kong’s benchmark measure for mainland companies climbed more than 10 percent last week while the Bloomberg China-US 55 Index of Chinese stocks in the U.S. rose 6.5 percent.
Listings by mainland companies in Hong Kong fell this year from the same period in 2010 as China, the world’s second-largest economy, grew at the slowest pace since 2009. Privately-owned consumer companies are raising funds on the city’s market as China encourages domestic consumption, Fok said.
“Even if more and more state-owned enterprises are listing on our exchange, the next big wave will be the private enterprises,” Fok said in an interview Dec. 2 in New York. “Some very successful private enterprises, especially in the consumer business, are looking to tap the capital market.”
Altogether, 61 mainland companies raised $14.3 billion through initial public offerings on the Hong Kong Stock Exchange through November this year, compared with $49.1 billion by 75 firms in the same period a year ago, according to data compiled by Bloomberg. A total of 86 companies brought in $53.4 billion on the exchange for the full year of 2010.
China’s economy expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 in the second. Growth will slow to 8.5 percent next year, the Organization for Economic Cooperation and Development said Nov. 29, down from its May forecast of 9.2 percent.
Some companies are in a rush to catch “the last train” in 2011 for IPOs even amid “poor” market conditions on concern that 2012 might be worse, Francis Lun, managing director at Lyncean Holdings Ltd. in Hong Kong said in an interview with Bloomberg Television Nov. 29. “If you get the money now, you can do a lot of things. You can buy distressed assets, for example.”
In the U.S., 10 companies from the greater China area are waiting to offer shares on the Nasdaq Stock Exchange, the bourse said in an e-mail Dec. 2. Eight Chinese companies have completed their IPOs on the Nasdaq this year, the bourse said.
“In the long run, it probably makes more sense for companies domiciled in Asia to get listed in Asia,” as it will help investors to get peer comparisons, greater liquidity and an in-depth investor base, said John Wong, a Hong Kong-based portfolio manager at Oberweis Asset Management Inc. Nov. 30 in New York.
The Bloomberg China-US 55 Index of the most-traded Chinese stocks in the U.S. pared its weekly advance on Dec. 2 with a decline of 0.8 percent, led by a drop in Aluminum Corp. of China Ltd., also known as Chalco, and Changyou.com Ltd. The gauge is down 4 percent this year, compared with an 18 percent decline for the Hang Seng China Enterprise Index and a 16 percent drop for the Shanghai Composite Index.
The Bloomberg measure for U.S.-traded Chinese stocks posted the biggest weekly gain in seven after China reduced its reserve requirements for banks for the first time since 2008. Policy makers on Nov. 30 acted to provide more liquidity to the system to shore up economic growth as the property market cooled and the European crisis eroded exports. A Dec. 1 report showed manufacturing contracted last month for the first time since February 2009.
Also on Nov. 30, the Federal Reserve and five other central banks who cut the costs of emergency dollar funding to European lenders to alleviate a credit crunch. The U.S. Labor Department said Dec. 2 the jobless rate unexpectedly fell last month to the lowest level since March 2009.
Youku Inc., China’s biggest online-video website, surged 27 percent last week to $19.91, leading gainers in the week among companies the Bloomberg benchmark.
Sina Corp., the owner of China’s Twitter-like Weibo service, climbed 8.5 percent in the past five trading days to a two-week high of $68.52. Deutsche Bank AG raised its rating for Sina on Dec. 1 to “buy” from “hold” with a 12-month target of $94.80.
Cnooc Ltd., the nation’s largest offshore oil producer, jumped 12 percent last week, the most in five, to $192.71. The company completed its acquisition of OPTI Canada Inc., an oil sand project developer, it said Nov. 28.
Chinese financial companies and commodity producers will benefit most from a potential cyclical rebound in the economy, Hao Hong, Beijing-based global equity strategist at China International Capital Corp., said on Bloomberg Television Dec. 2.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., gained 9.2 percent last week to $36.40. The Chinese yuan strengthened 0.2 percent during the period to 6.3597 per dollar, according to the China Foreign Exchange Trade System.
The government is scheduled to report November inflation rate and production figures this week. The increase in consumer prices may slow to 4.5 percent last month from a year ago, the median estimate of 26 economists surveyed by Bloomberg showed. That would compare with 5.5 percent in October and a three-year high of 6.5 percent in July.