Despite market volatility in 2010, the development of the China IPO market remained steady, with funds raised through IPOs in the Shanghai and Shenzhen stock exchanges reaching a historic high, says PricewaterhouseCoopers. Due to the low probability of a major IPO in the near term, PwC forecasts that the funds raised through IPOs will drop back in 2011 from the historic high. Total number of new listings will reach 320, including 30 listings in Shanghai and 290 on the Shenzhen SME Board and ChiNext, with funds raised exceeding RMB400 billion (US$60 billion).
Looking back on 2010, the Shanghai and Shenzhen stock exchanges had 349 IPOs in total, raising RMB 478.3 billion (US$72.6 billion) in combined IPO funds, an increase of 155% from that of 2009 (RMB 187.9 billion). Small and medium sized enterprises were very active during this period, becoming the main driving force in the IPO market. The Shenzhen SME Board attracted 204 IPOs, with funds raised reaching RMB 202.7 billion (US$30.7 billion), an increase of 378% from 2009 (RMB 42.4 billion), highlighting the importance of SMEs inthe future of the capital market. ChiNext, launched in October 2009, also showed robust development, with the number of new listings reaching 117, amounting to RMB 95.4 billion in funds raised. In addition, Shanghai had 28 A-share IPOs, which amounted to RMB 180.2 billion in funds raised.
Meanwhile, Hong Kong continued to sustain the largest listings market in the world, beyond mainland China, raising HK$445.0 billion (US$57 billion) in IPO funds, representing a 79% increase from that of 2009. The funds raised through IPOs and TDR in the Taiwan market amounted to TW$ 59.3 billion (about US$2 billion), an increase of 53% compared with that of the previous year.
"In 2010, the government's policies in response to the global financial crisis began to take effect, and the market was relatively stable," says Frank Lyn, PwC China Markets Leader. "One of the highlights of the IPO market in 2010 was the performance of the Shenzhen SME Board and ChiNext. It showed that the development of small and medium-sized enterprises in China has entered a growth boom, promising to become the main driving force of the future in the mainland China stock market."
In 2010, industrial products dominated in terms of number of new listings on the China stock exchanges, leading the Shanghai A-share market, the Shenzhen SME Board and ChiNext. Information technology and telecommunications accounted for 35% of IPOs on ChiNext, and increased its share on the Shanghai A-share market and the Shenzhen SME board, demonstrating the promising future of that industry and indicating that, since the launch of ChiNext, capital resources have been weighted in favour of growth and innovation-based enterprises.
"2011 is the first year of China's 12th Five-year Plan," says Charles Feng, PwC China Beijing Lead Partner. "The government is committed to speeding up the reform of the economic growth model, highlighting technology and innovation as pillars of the reform. Over all, the listing of innovation-based enterprises has increased the research and development (R&D) and technological strength of the Shenzhen SME Board. I believe small and medium-sized high-tech and growth enterprises will lead the capital market in coming years."
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