Worsening sentiment narrows market window for new listings

The so-called "market window" for companies that plan to list in Hong Kong this year is closing after a major mainland bank failed to launch its initial public offering this week, thanks to worsening market environment, bankers and analysts say.

What makes it more difficult for listing hopefuls, particularly cash-hungry companies from the mainland, in seeking to launch their share sales soon is the securities watchdog's tougher scrutiny on new offerings.

The postponement of the public offering of China Everbright Bank, a medium-sized state-controlled bank already listed in Shanghai, dampened the sentiment of other potential listing candidates.

Poor market liquidity and low interest in new public offerings from both institutional and retail investors mean a smaller chance of bigger stock offerings happening for the rest of this year, bankers say.

"The year is set to be a very tough one for bankers in the equity capital market because equity deal flows have continued to remain weak," said a market veteran with a European bank. "And that also means bad news for bankers' bonuses at the year-end."

The initial public offering market in the city is facing a dual threat as larger enterprises such as Everbright Bank do not want to underprice themselves by rushing to list while smaller companies have to encounter more stringent requirements from regulators after a tide of scandals about false accounting by newly listed mainland private enterprises.