PwC Predicts Slower Year For Hong Kong Listings

by Mary Swire, Investors Offshore, Hong Kong

01 January 2003

After Hong Kong Exchanges and Clearing (HKEx) reported a record 117 new listings in the SAR last year, raising HK$52bn, accounting giant PricewaterhouseCoopers (PwC) says it expects this year's performance to be much weaker, with fewer listings raising only half as much.

PwC points to a dearth of companies likely to go public (in 2002 the Bank of China and China telecom listings accounted for more than HK$30bn of funds raised), a possible United States-Iraq war and the weak global economy.

It's true that the rush to market in 2002 was dominated by mainland companies; but HKEx says there are already more than 100 companies in its listing process, and Chinese companies are desperate to rasie cash to finance expansion in the mainland's booming markets. So PwC may be unduly conservative in its estimates.

PwC partner Ernest Ip Koon-wing, however, said: "To achieve a better pricing for their IPOs, the large companies are likely to wait until 2004 to seek a listing, provided that the economy has recovered by that time." Mr Ip said the only hope lay in China's big life-insurance companies. China's largest insurer, China Life Insurance, and Shenzhen's Ping An Insurance have revealed plans to float overseas; Ping An has said it wants to raise HK$10 billion.

Some mainland property firms might also seek Hong Kong listings, said Mr Ip. "Hong Kong would be the first choice for these companies to go for overseas listings because of the high liquidity of the local market," he said.

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