Investing

Chinese IPOs on NYSE to Jump Fourfold in 2010


By Frederik Balfour

(Bloomberg) — NYSE Euronext (NYX), owner of the biggest U.S. stock exchange, said initial public offerings by Chinese companies may rise fourfold next year, as an improving global economy restores demand for riskier stocks.

As many as 20 Chinese companies may seek to list on the New York Stock Exchange, compared with five this year, Michael Yang, chief representative of NYSE Euronext's Beijing office, said in an interview yesterday. The sales may raise $3 billion, from about $500 million this year, he said.

"Two or three months ago we forecast there would be nearly 10 Chinese companies doing IPOs by the end of this year," Yang said on the sidelines of a health-care venture capital meeting in Beijing. "But many IPOs will be delayed to next year, so we will see just half the number."

Luring Chinese companies to list may help counter competition from newer rivals such as Chi-X Europe Ltd. and Direct Edge Holdings LLC, which have been taking market share from traditional exchanges in the U.S. and Europe. NYSE's share of U.S. stock trading fell to 28 percent in November from 28.1 percent a month earlier.

Chinese companies have raised $45 billion in IPOs this year, up from $22.6 billion last year, according to data compiled by Bloomberg. More than half of the fundraising was inside China, where government stimulus measures and a weak yuan have helped the country skirt the first global recession since World War II.

China's gross domestic product expanded at an 8.9 percent pace in the three months to Sept. 30. The Shanghai Composite Index has gained 78 percent this year.

China Shipbuilding Industry Co. raised 14.7 billion yuan ($2.2 billion) in the nation's third-largest initial public offering this year. The stock rose as much as 18 percent on its first day of trading in Shanghai today.

Competitive EdgeHealthcare, technology and alternative energy companies are attracted to a U.S. listing because investors have a better understanding of their industries and there is greater coverage by analysts, Yang said.

"The liquidity of those companies will be better," he said.

Two of this year's five IPOs were healthcare companies. On Nov. 22, China Cord Blood Corp. (CO), which processes blood from umbilical cords containing stem cells, raised $20 million. Concord Medical Services Holdings (CCM), an operator of radiology centers in China, raised $132 million on Dec. 12.

Yang declined to name companies planning to list next year. Those that have made their SEC filings public include China Hydroelectric Corp. and BJB Career Education Co., a provider of vocational training in technology.

There are 56 Chinese companies whose shares trade on the NYSE with a combined market value of $1.1 trillion, Yang said. That includes PetroChina Co., the world's biggest company by value. However, the average size of next year's offerings will be about $150 million, he said.

To contact the reporters on this story: Frederik Balfour in Hong Kong at fbalfour@bloomberg.net.

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