China's IPO market slowed by a fifth in the first half of 2011 amid a lack of mega deals that hit the market the year before, with fundraisings dominated by small businesses, a trend that analysts said could last for a few more months.
In the first six months, only about one tenth of companies seeking a listing had chosen to do so on the Shanghai Stock Exchange while the rest had gone to the smaller Shenzhen bourse, which houses the Nasdaq-style ChiNext market.
Shanghai's sluggish IPO market had pushed down total IPO proceeds raised in mainland China by 20 percent from a year ago to $24 billion in the first half of the year, data complied by Thomson Reuters showed.
The trend may last for a while longer pending the launch of the long-awaited international board to allow top-quality multinationals such as HSBC
There will be larger IPOs coming to the market, especially if you take into consideration the international board, which we believe will be launched in the next six to 12 months, said Cao Xuefeng, head of research at Huaxi Securities in the south western city of Chengdu.
The two biggest IPOs in Shanghai this year were the $1.4 billion Sinovel Wind <601558.SS> IPO and the $710 million IPO of Pangda Automotive Trade <601258.SS>.
That pales when compared to the Hong Kong Stock Exchange which had seen a string of high-profile IPOs this year, including commodities trader Glencore's <0805.HK> $10 billion deal and Italian fashion house Prada's <1913.HK> $2.1 billion offering.
SMALLER INVESTMENT BANKS SHINE
In Shenzhen, 136 companies raised a total of $16.6 billion on the ChiNext and the SME board in the first half, accounting for more than two-thirds of the total proceeds raised in mainland China.
The fundraising boom on the Shenzhen Stock Exchange helped lift Shenzhen-based investment banks, such as Guosen Securities and Ping An Securities to the top spots of the China IPO league table.
Guosen Securities secured the No.1 position in the first half of 2011, clinching 18 deals with a combined deal value of $2.8 billion, Thomson Reuters data showed. Guosen was ranked third in the same period last year.
Ping An Securities, a unit of Ping An Insurance <601318.SS> <2318.HK>, maintained its No.2 place with 17 deals worth $2.1 billion.
The Chinese joint venture of Deutsche Bank
China was the world's largest IPO market in 2010, with 347 companies including Agricultural Bank of China <601288.SS><1288.HK> and Everbright Bank <601818.SS> raising nearly 490 billion yuan through first-time share sales in the domestic A-share market.
The Chinese government not yet said when the international board will be launched but expectations have been running high in recent weeks that an announcement could come soon.
Shang Fulin, the chairman of the China Securities Regulatory Commission told a financial forum in Shanghai last month that the international board is coming closer and closer to us.
Recent volatile market conditions worldwide have prompted talk that the launch of the board may be put on the back burner, but Huaxi's Cao said that was unlikely given China's goal to promote the global profile of the yuan currency.
The international board fits well with China's strategic interest, I think any decision regarding the board is less likely to be swayed by market factors, said Cao at Huaxi Securities.
(Editing by Kazunori Takada and Daniel Magnowski)