The accountancy firm expects only 88 new listings this year, down 32 per cent from the previous year Funds raised through Hong Kong initial public offerings (IPOs) this year are expected to fall sharply from last year in the wake of the Sars outbreak and the central government leadership reshuffle, according to accounting firm PricewaterhouseCoopers (PwC). PwC partner Richard Sun Po-yuen expects only 88 companies will list in Hong Kong this year, down 32 per cent from last year, with funds raised falling to $25 billion from $52 billion. Mr Sun said there had been no IPOs this year to compare with last year's listings of Bank of China's Hong Kong unit and China Telecom Corp. BOCHK raised $21 billion and China Telecom $11 billion. 'The change of leaders in the central government has slowed down the restructuring process of mainland enterprises. The Sars outbreak also caused investment banks to suspend their work in the mainland for three months,' Mr Sun said. He believes the only big mainland company to list in Hong Kong this year could be either China Life or Ping An Insurance, raising about $10 billion. Other planned large IPOs involving mainland companies, such as China Post, were unlikely to proceed this year, he said. The number of IPOs in the first six months fell to 28, down 55 per cent from the same period last year. However, funds raised in the first half increased by 22 per cent to $7.1 billion. Mr Sun said the IPO market came to a standstill in April and May but recovered last month with 10 new listings. He estimated the recovery would continue in the second half, with an average 10 new listings a month, bringing 60 new listings by the end of the year and raising $18 billion. The estimate is in line with the forecast of Hong Kong Exchanges and Clearing (HKEx) chief executive Paul Chow Man-yiu, who last week predicted there would be 60 to 70 listings in the second half. Academics have warned that it is the quality of the companies attracted to list in Hong Kong that is important, not the target number of IPOs. However, Mr Sun believes the exchange's forecast is reasonable. 'HKEx always adopts the same strict requirements when approving listing applications. There is no evidence proving the exchange is compromising on quality to attract a larger quantity of listings,' he said. Mr Sun said he supported HKEx's move to shift listing approval to an independent body to solve its conflict-of-interest problems as a listed company. However, he did not think HKEx should be blamed for the corporate scandals involving newly listed companies in the past two years. 'The problems were mainly a result of corporate fraud of the management of the companies. They were also because the investment banks which acted as listing sponsors did not fulfil their duties to carry out proper due diligence,' he said. Mr Sun believes the exchange's proposal to tighten regulation of listing sponsors should improve the quality of new listings.