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| Records set as mega-IPOs raise billions ( 01/01/2005 ) | |||||||||
As it continued to set IPO records with billions of dollars raised, the Stock Exchange of Hong Kong (HKEx) also emerged as the channel of choice for Chinese mainland enterprises to raise capital. Since the listing of Tsingtao Brewery nearly a decade ago, mainland-related enterprises have raised more than US$100 billion in Hong Kong. Statistics as of October 2004 show that mainland companies account for a quarter (286 enterprises) of the 1,084 listed issuers, for nearly 30 per cent (US$226 billion) by market capitalisation, and nearly half (US$1 billion) by average daily turnover. Mainland activity swells Hang Seng Bank estimates that mainland companies have raised HK$59 billion (US$7.6 billion) in the first 10 months of 2004. All this IPO activity has swelled the exchange's turnover to well past HK$3 trillion (US$388 billion). Hang Seng Investment Services notes that as of December 20, the turnover has surpassed the previous record in 1997, reaching HK$3.7 trillion (US$478 billion). This capital-raising momentum is set to continue in 2005 with financial services institutions predicting that US$40 billion would be raised by mainland enterprises, including three of China's largest banks (China Construction Bank, Bank of Communications and Bank of China), largely through IPOs in Hong Kong. Great expectations for 2005 ride on the IPO glut in 2004 when the sheer volume of capital raised makes the HKEx the second largest in the world in terms of equity funds - behind the New York Stock Exchange (NYSE) which has raised nearly US$83 billion from January to September 2004, according to the World Federation of Exchanges. LSE 'vote of confidence' Having gauged the immense future potential in Hong Kong, the London Stock Exchange (LSE), the world's oldest, also opened a regional office in the city with an eye on the public floats of mainland enterprises. This was a vote of confidence in Hong Kong's strong economic fundamentals and its position as Asia's world city, according to Financial Secretary Henry Tang at LSE's opening. Of the business potential for LSE in Hong Kong, chairman Chris Gibson-Smith said: "China's economic miracle has barely begun. Mainland companies are not just satisfied with expansion but globalisation as well.'' In the last quarter of the year, several major mainland companies tapped into a huge pool of retail and institutional money, amid projections China's economy will grow 8-9 per cent in 2005. At year end, Air China, the largest international carrier in China, pulled off a successful share offer raising over US$1 billion. In early December, China's second largest computer equipment maker ZTE Corporation also had a successful float. It was the second-most popular listing in 2004, after China Power International, the mainland's fifth largest power producer. Asset sales boost shares In addition to mega IPOs boosting market turnover, stock exchange shares reached a record high in December. Hong Kong SAR Government's asset sales including the Airport Authority float, as well as greater financial services sector co-operation through the CEPA free trade pact are certain to bolster the exchange further in the new year. Sound market discipline in the areas of corporate governance, accounting and management practices also strengthen the exchange's stature in the global financial world. Outlining initiatives to improve market quality in 2005, HKEx chairman Charles Lee told the China Financial Forum that the exchange "will support the enshrining of key listing rules in statute books, and facilitate simultaneous listing of A and H shares.'' As for market infrastructure, Mr Lee noted that the "capacity of trading systems'' would be upgraded. | |||||||||
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