Hong Kong was the primary equity fund-raising channel for mainland companies last year, surpassing the United States to become the largest capital raising market in the world.
Chinese banks and companies raised more than US$45billion last year through overseas initial public offerings (IPOs), a significant increase from the US$30billion in 2005. China remained the largest source of IPOs in Hong Kong, with about half of the nation's fund-raising activities taking place on the city's index.
According to the Hong Kong stock exchange, mainland firms accounted for 73 per cent of equity funds raised last year and contributed to about 50 per cent of market capitalisation.
'Hong Kong's IPO market has heavily relied on the mainland over the past decade and is now still counting on the listing of mainland state-owned enterprises, private enterprises and Hong Kong enterprises with production based on the mainland,' says Chan Yuk-keung, a fund manager at Phillip Asset Management. 'The mainland authorities' policies and foreign investor appetite for mainland stocks are shaping the development of the Hong Kong stock market.'
Last year should be a memorable one for everyone working in the city, not just for people in the investment field or executives at the Hong Kong Exchanges and Clearing, but for all sectors because of the record amount of capital raised in IPO flotations in Hong Kong.
Industrial and Commercial Bank of China, the largest bank in China, raised US$21.9billion from its dual listing in Hong Kong and Shanghai last October. About US$16.8 billion was raised on the Hang Seng Index. In so doing, it became the largest IPO in history, surpassing Japan's NTT Mobile Communications US$18.4billion offering in 1998.
