Hong Kong and China to Attract More Cross-Border IPO Activities

According to a research report released by Emst & Young, Across borders: An analysis of cross-border IPO trends, cross-border IPOs have been increasing steadily on major bourses, particularly on Hong Kong Exchanges and Clearing (HKEx), the London Stock Exchange (LSE), the New York Stock Exchange (NYSE) and NASDAQ over the last decade, with HKEx ranked first in cross-border IPOs.


From 2000 to the first half of 2010, there were 1,114 cross-border IPOs with total funds raised of US$366 billion on HKEx, the LSE, the NYSE and NASDAQ. More than half of the cross-border IPOs were from companies from the BRIC countries, which represented 52% of the total number of cross-border IPO deals, or 68% of total funds raised.


Over the past decade, Chinese mainland companies ranked first in seeking cross-border IPOs both in terms of total funds raised and number of deals. There were 495 cross-border IPOs of Chinese mainland companies which raised US$188 billion from 2000 to the first half of 2010. HKEx outperformed the other stock exchanges and attracted 409 cross-border lPOs with total funds raised of US$171.2 billion.


The LSE ranked second in terms of cross-border IPOs with total funds raised of US$98.2 billion, the NYSE ranked third with total funds raised of US$66.7 billion, while NASDAQ ranked fourth with total funds raised of US$29.9 billion.


“Over the past decade, HKEx has evolved as a leading stock exchange for cross-border IPOs,” said Ringo Choi, Regional Managing Partner, China South, Ernst & Young. “In addition to total funds raised and number of IPO deals, HKEx has overtaken the NYSE in terms of annual average funds raised since 2005. ln recent years, HKEx has also attracted companies from developing and emerging markets other than the Chinese mainland.”   


While there are currently no intemational listings in the Chinese mainland, the Shanghai Stock Exchange (SSE) has been growing very quickly in recent years. ln 2009, it ranked second globally in terms of the total IPO funds raised of US$18.3 billion, demonstrating its growing stature as a major exchange. lt is expected to continue to grow as the economy of the Chinese mainland expands.


“Besides the BRIC countries, we will see a wide range of companies from diverse geographies choose to list on HKEx,” said Dilys Chau, Assurance Partner, Ernst & Young, “and the proposed International Board (IB) of the SSE. HKEx and the stock exchanges in the Chinese mainland should work hand in hand so that China, including Hong Kong, will become the hub for global cross-border IPO activities.”