China's IPO activity expected to pick up in 2013

HONG KONG - After a weakened IPO activity in China in 2012 due to lack of maga deals, Ernst & Young expects China's IPO market to pick up in 2013 as the global economy recovers and the government's supportive policies starts to take effect, the accounting firm said Wednesday.

The assurance partner of Ernst & Young Patrick Law said following the lifting of restrictions for the Chinese mainland's companies to list in Hong Kong, more small and medium sized enterprises will complete their IPOs in Hong Kong by the issue of H-Shares in a wide range of sectors, particularly the real estate firms.

He expects that over 80 IPOs will take place in Hong Kong in 2013 compared with 60 in 2012, and the total funds expected to be raised will reach about HK$130 billion($16.8 billion) compared to HK$103 billion this year.

Law also expects an increase in IPO activities for A-Shares next year as the introduction of new government policies within a short period of time in the second quarter in 2013 drives IPO activities for those companies benefiting from the measures.

He said currently there are over 800 IPO applicants on the China Security Regulatory Commission's list, projects to raise about 500 billion yuan, in compare to the 103 billion yuan raised by A-Shares IPOs in 2012.

On the global IPO market's aspect, Ernst & Young said the significant macroeconomic volatility and the unstable equity market conditions weakened the IPO performance in 2012. However, the global major stock exchanges lifted largely in the fourth quarter this year, thus suggesting signs of stability in equity markets and supportive central bank policy are stating to take effect.

Ernst & Young expects 2013 to be the right time for companies currently in the pipeline to list, with a strengthening US economy leading the recovery and the reduced stock market volatility.