May 2010 
There was a significant rebound of IPO activities in the Greater China capital markets in the second half of 2009, even though other capital markets over the world were still suffering from the global financial crisis and contracting economy.
There were 208 IPOs in Greater China with total funds raised amounting to USD59.7 billion in 2009, compared to 157 IPOs with USD23.9 billion funds raised in 2008. The Greater China capital markets regained the leading role with the highest total funds raised among the world’s major capital markets in 2009. United States (New York Stock Exchange and NASDAQ) ranked second in 2009 as there was a lack of mega size company listings.
There were some sizable companies listed in Hong Kong and Shanghai this year. The average deal size increase from USD0.15 billion in 2008 to USD0.29 billion in 2009. In addition, the trend of H-share companies (Mainland China companies listed on the Hong Kong Stock Exchange) offering and listing their shares on the Shanghai A-share market continue in 2009. In 2009, there was one existing H-share listing its shares on the Shanghai A-share market and there was a company listing its shares in Hong Kong and Shanghai almost the same time.
In 2009, Shenzhen ChiNext was launched and successfully attracted 36 companies with IPO funds raised of USD3 billion. ChiNext offers a new capital platform for Chinese enterprises engaged in innovation and other growing industries. All these IPOs were offered at a P/E multiple of over 30 times.
There was a general increase in pricing, in terms of Price Earnings multiples (P/E), in Hong Kong, Shanghai and Shenzhen. 38% of those newly listed companies in Hong Kong offered shares at a P/Es of more than 20 times while it was only 29% in 2008. In Shanghai, most of the IPOs were offered at a P/E multiples of over 30 times in 2009 while all the IPOs in Shenzhen were offered at P/E multiples of over 30 times in 2009.
Looking ahead, with the economy stimulation plans still being put in place by various governments, it is expected that both stock markets and IPO activities will continue to be prosperous. The Chinese Government has announced its intention to transform Shanghai into an international financial centre by 2020. In this regards, Shanghai is expected to establish an International Board soon to attract red-chips or other sizeable overseas companies to list there. For Hong Kong, we believe that it will continue its well-established position to be a gateway for foreign investors to access to the China market. We expect that these will be more overseas companies offering and listing their shares in Hong Kong in the coming year.
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Greater China IPO Watch 2009 (pdf file, 1.21MB) for your reference.
