Companies tipped to raise up to HK$150b capital in 2013: Deloitte

Hong Kong's IPO market is expected to rebound in 2013 from the slump this year, supported by improving fundamentals including stronger economies, increased liquidity and the fading away of some negative factors, according to Deloitte.

The Hong Kong IPO market is expected to raise between HK$100 billion to HK$150 billion in 2013 with 70 to 80 new listings, and the deal volume is expected to be up to 68 percent higher than it was in 2012, Edward Au, co-leader of National Public Offering Group of Deloitte China told a press conference on Wednesday.

Hong Kong has the potential to raise its profile again as one of the world's top three IPO markets in 2013, Au said, adding that the major competitor for Hong Kong is New York.

With 62 new listings raising HK$89.4 billion, Hong Kong is expected to close 2012 with the most lackluster performance since 2009. The city's IPO market is expected to be the fourth top global listing venue this year, ranking after NASDAQ (HK$175.3 billion), the New York Stock Exchange (HK$168.3 billion) and Tokyo Stock Exchange (HK$97.8 billion), according to Deloitte.

But the worst time for the Hong Kong IPO market seems to have passed already, as the market has been more active since the beginning of the fourth quarter. Statistics show that around half of the proceeds raised in 2012 came from new listings in this quarter.

The relatively positive market sentiment is likely to extend into 2013, as the economic growth on the mainland as well as in Hong Kong is expected to stabilize and strengthen in 2013, providing support to investor's confidence.

Most analysts forecast that the mainland's GDP growth will be around 8 percent, up from an estimated 7.7 percent growth this year; Hong Kong's economic expansion is also expected to accelerate to above 3 percent in 2013 from around 1 percent in 2012.

Meanwhile, the global liquidity condition is improving, as the Federal Reserve has just launched a new round of bond purchases to stimulate the economy and the Bank of Japan is also expected to add to its economic stimulus again.

Investors also expect the US to remove some of the overcast in the market, as they have confidence that US policy makers will reach a budget deal, according to Au.

Companies from the financial service industry, like some regional banks on the mainland and European banks, are likely to be attracted to list in Hong Kong next year, as some of them may need to raise funds to meet their capital reserve ratio, said Terence Cheung, partner at Deloitte Touche Tohmastsu.

Aside from the financial sector, Cheung also sees that real-estate companies from the mainland to be interested to list in Hong Kong in 2013, as it has been over two years since the Chinese central government implemented curbing measures to cool down the real-estate market and there is a chance that the sector may bounce back a little next year.

"I think the financial services (sector) and real-estate (sector) will be the growth engine for next year's IPO market in Hong Kong," said Cheung.

sophiehe@chinadailyhk.com

(HK Edition 12/20/2012 page2)