HONG KONG: Ronald Arculli, chairman of Hong Kong Exchanges & Clearing Ltd, is expecting "big" initial public offerings as stock trading increases on better sentiment and as money continues to pour into Asia.

Capital raised on the bourse's main board through initial share sales in the first half amounted to HK$17.6 billion ($2.3 billion), 65 percent lower than a year earlier, the exchange said yesterday as it announced profit for the period. Companies in Asia, excluding Japan, raised a total of $3.59 billion through IPOs in the same period, according to data compiled by Bloomberg.

"In IPO terms, Hong Kong is actually doing quite well in the first half of this year," Arculli told Bloomberg Television in Hong Kong yesterday. "In the second half of this year and first half of next there should be some big IPOs in Hong Kong."

The main Hang Seng Index has soared 84 percent from a four-month low on March 9, as government efforts worldwide, including 4 trillion yuan ($585 billion) of spending on the mainland, have prompted speculation of a global economic recovery.

"Markets lead actual numbers," said Arculli. "So maybe we'll be lucky in the second half and into next year as well."

Average value of trading was HK$72.2 billion a day in the quarter started July 1, higher than the year's daily mark of HK$61 billion, data compiled by Bloomberg show. Some HK$71.7 billion of stock changed hands every day in the second quarter, the bourse said yesterday.

"We've seen higher than that before and being a bit of an optimist I think we'll be there," Arculli said. "Money is coming to Asia from all over the world and Hong Kong is one of the beneficiaries."

Seven IPOs have been approved and are awaiting listing on the main board, while the exchange is processing another 33 applications, Chief Executive Officer Paul Chow told reporters yesterday. There were a total of 14 new listings during the first six months of the year, the bourse reported.

China Zhongwang Holdings Ltd, the nation's largest maker of extruded aluminum products, debuted on the exchange on May 8 after raising HK$9.8 billion in its IPO. BBMG Corp., whose cement helped build 2008 Beijing Olympics venues, attracted about $100 billion in demand from investors for its HK$6.8 billion stock sale in July.

Evergrande Real Estate Group Ltd, which staged what could have been the largest Hong Kong IPO by a mainland developer in March 2008, has re-applied to the exchange to sell shares. Last month, Casino operator Wynn Resorts Ltd filed for a Hong Kong IPO of its Macao assets that could raise at least $1 billion.

The final months of the year are set to be Hong Kong's busiest for IPOs in two years, Mark Williams, Hong Kong-based Asia joint head of equity capital markets at UBS AG, which co-arranged BBMG's sale, said this month.

Hong Kong Exchanges, operator of Asia's No. 3 stock market, said yesterday its first-half profit fell 26 percent to HK$2.2 billion as the global economic slump caused the value of stock traded to tumble by a third. Profit beat the median estimate of HK$2.1 billion in a Bloomberg survey of four analysts.

In terms of positioning the exchange for greater integration with mainland markets, Arculli told Bloomberg Television that discussions are "ongoing." He ruled out any merger with either of the mainland bourses any time soon.

Bloomberg News

(HK Edition 08/14/2009 page3)