- POSTED: 03 Jan 2014 20:41
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Hong Kong took second spot behind New York as the world's biggest IPO market last year, raising US$21.7 billion. For 2014, PwC expects the trend to continue, predicting 100 new listings, raising more than US$32 billion.
HONG KONG: The Hong Kong initial public offering (IPO) market may be just as busy in 2014 as it was in the final quarter of last year, as companies rushed to list ahead of the US Federal Reserve’s tapering.
And it appears to be off to a good start, with tycoon Li Ka-shing hoping to kick-off a US$5 billion offering shortly.
Hong Kong took second spot behind New York as the world's biggest IPO market last year – improving two notches from the previous year - raising US$21.7 billion.
For 2014, accountants PwC expects the trend to continue, predicting 100 new listings, raising more than US$32 billion.
Edmond Chan, Capital Markets Partner at PwC, said: "Since the second half of last year, we have been very busy and we expect this will continue this year and maybe (it will be) even busier than last year.”
Still, China's slow pace of financial reform could be the biggest drag on Hong Kong equities.
Alex Wong, director of Ample Capital, said: "Sentiment towards China is deteriorating. We are not in a more bullish market, we are in a more bearish market towards China so valuations would be okay.
"Of course different sectors would have different pricing, but I think overall pricing would not be aggressive."
Testing the waters next week is an investment trust that is shaping up to be Asia Pacific's biggest deal in a year, at US$5 billion.
HK Electric Investments, which owns power plants and electricity networks in the city, will take the form of a stapled trust - preference shares and common shares are sold as units, which then pay dividends from their cash flow.
Retail and consumer goods companies are expected to list in 2014. More mid-tier financial institutions will also list. Furthermore, more Chinese internet and tech companies are also seeing Hong Kong as providing better valuations.
Mr Wong said: “If Alibaba can come to Hong Kong, that would be the most exciting one, because the market size is big and it is very unique. Probably A.S. Watson as well, this is a retail group worldwide, operated by Hutchison."
Alibaba's multi-billion offering fell through last year largely because of the inflexibility of the Hong Kong Exchange to allow variable voting shares, although it is now encouraging debate on alternative shareholding structures.
Another sizeable issue to watch in 2014 is A.S. Watson and Sons, which is also controlled by Mr Li. It is planning a US$10 billion spin-off from conglomerate Hutchison Whampoa.