IPO cash in China triples U.S. listings

By Robert Cookson, FT.com
L?Occitane, the French cosmetics chain, became the first from France to list in Hong Kong this year.
  • Chinese stock exchanges have raised almost triple the cash of U.S. IPOS
  • Shows China's rise as a global financial powerhouse
  • Hong Kong raised $52.8 billion in IPOs this year
  • U.S. raised $42 billion in IPOS this year
(FT) -- Chinese stock exchanges, including the Hong Kong bourse, have raised almost triple the amount of money secured by initial public offerings across the US in 2010, underscoring China's rise as a global financial powerhouse.

Hong Kong takes the crown as the world's biggest centre for new listings, raising $52.8bn in IPOs this year, compared with $42bn in the US. Mainland exchanges raised $66.9bn, according to Dealogic.
The figures highlight the shift in global economic and financial activity from the US and Europe to emerging markets, particularly China -- a long-term trend that accelerated in the wake of the global financial crisis.

"It is really a tale of regions, with European banks seeking capital to repair battered balance sheets while in Asia funds are used solely to fund growth," said Matthew Koder, head of global capital markets at UBS.
While Hong Kong and Shanghai are well known as big fundraising hubs, this year there has also been an extraordinary boom in IPOs on the Shenzhen Stock Exchange, China's second-largest bourse.

Some 190 companies, mostly small or medium-sized enterprises, have raised a combined $28bn in Shenzhen, with an additional 104 companies raising $12.9bn on ChiNext, China's nascent board for start-ups.
Hong Kong -- which became the world's most active IPO market in 2009, ending more than a decade of dominance by the US -- has begun to attract big listings from companies based outside China.

Rusal, the Russian aluminium group, and L'Occitane, the French cosmetics chain, both became the first companies from their countries to list in Hong Kong this year, raising $2.2bn and $700m, respectively.
Prada, the Italian luxury goods company, is considering a listing in Hong Kong next year, rather than in London or Milan, as it believes it might obtain a higher valuation there.

Stephen Jennings, chief executive of Russia's Renaissance Capital, said Hong Kong was in a prime position to benefit from rising flows of capital between emerging markets, which would increasingly bypass the traditional financial centres of London and New York.
Renaissance opened a Hong Kong office this year and plans to help African and Russian companies float in the city.

However, there are some concerns that China's capital markets are become too hot. Smaller companies listed in Shenzhen trade at extremely high valuations, many at price-to-earnings multiples above 70.
In Hong Kong, the Securities and Futures Commission is investigating whether some companies, and the investment banks that advised them, misled investors ahead of their IPOs.