China to Remain in the Lead in the Global IPO Market
China will remain in the lead in the global IPO market next year, even with the dramatic weakening on new offerings in the second half of 2011. In 2011, the Shenzhen Stock Exchange was the most active IPO market in the world. It ranked first on issues and was second in the amount of capital that was earned in the first 11 months of 2010.
According to the accounting firm Ernst & Young, a rebound on IPOs in the first half of 2012 and Shenzhen Stock Exchange will be one of the key drivers. The IPO pipeline of Chinese issuers remains healthy and is expected to raise at least 300 billion yuan of capital in the first half of 2012. Also according to Ernst and Young, in 2011 the Shenzhen exchange raised 181 billion yuan in 243 deals including small and medium enterprises and start ups.
Capital that was raised through IPOs in 11 months of this year raised a total of 155.8 billion globally, despite China’s A-share market seeing a decline of 42 percent year-on-year on IPO capital raised. In addition, global economics uncertainties and tighter domestic regulations required listed companies to give higher dividends.
Analysts still remain optimistic about next year’s IPO situation, with increasing liquidity on the markets as China is starting to loosen monetary policies that are intended to support growth. A healthy pipeline of private companies are in line to go public as soon as the market conditions improve.