Magazine article Global Finance

China IPOs Boost Hong Kong Exchange

Magazine article Global Finance

China IPOs Boost Hong Kong Exchange

Article excerpt

The Hong Kong Stock Exchange is giving London and New York a run for the money as the world's largest venue for new listings, thanks to privatizations of China's big state-owned banks and industrial companies. Hong Kong's exchange raised about $35 billion in initial public offerings in the first three quarters of 2006, placing it second to London's approximately $40 billion in new listings but ahead of New York s $30 billion, according to Thomson Financial.

US issuers accounted for only 20.1% of global IPOs in the period, which was the lowest percentage on record. More than half of Hong Kong's total, however, came from two big bank IPOs. Bank of China raised $10 billion in June, and Industrial and Commercial Bank of China raised about $16 billion in Hong Kong in late October.

While no IPOs of that size are expected in the near future, a flood of smaller deals by Chinese companies in a broad range of industries is keeping Hong Kong busy. China Communications Construction, China's leading transport infrastructure company, raised $2.1 billion in its Hong Kong IPO in December. The company sold 3.5 billion new shares, representing a 24.5% ownership stake, and attracted about $162 billion in orders from institutional investors. BOC (International) Holdings, Merrill Lynch and UBS arranged the sale.

China Communications Construction will use the proceeds of its IPO to buy equipment to build roads and bridges, ports and railways. The company accounts for 90% of the market to design and build ports in China, and it plans to increase production at its container-crane manufacturing facility in Shanghai. China plans to invest $485 billion in transport-related infrastructure under its current five-year plan that ends in 2010.

Meanwhile, China National Coal, the country's second-largest coal producer after Shenhua Energy, was conducting a road show last month for what was expected to be a $1. …

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