PwC cuts forecast of IPOs and funds

By Bei Hu  |   2008-7-3  |     NEWSPAPER EDITION

PRICEWATERHOUSECOOPERS LLP cut by more than half its forecast for funds raised in Hong Kong initial public offers this year, as the United States subprime mortgage market collapse and ensuing financial turmoil force companies to delay or cancel share sales.

The international accounting firm now expects 55 first-time Hong Kong public share offerings to raise HK$130 billion (US$$16.7 billion) in 2008, compared with a January forecast that 90 Hong Kong IPOs would fetch a combined HK$280 billion.

The new estimate implies a 56-percent decline from the HK$295 billion raised in Hong Kong initial share sales last year, according to Bloomberg News calculations. Global IPOs in the first half ran at their slowest pace since 2003, as surging delinquencies in the US subprime mortgage market damped demand for risky assets such as stocks.

"At the beginning of the year, the US subprime crisis was still emerging, and we didn't expect it to have such a major impact," Richard Sun, a Hong Kong-based PwC partner, said at a press conference yesterday. "More importantly, we couldn't have foreseen the serious blow dealt to investment sentiment by China's natural disasters, including the snowstorm and earthquake."

Hong Kong IPOs raised HK$48.9 billion in the first half, the lowest since 2003 and less than half of the HK$120.5 billion collected a year ago, according to data compiled by Bloomberg.

PwC also said IPOs in China's mainland will raise 250 billion yuan (US$36.4 billion) this year, down from 477 billion yuan in 2007.

Twelve firms may go public on the Shanghai and Shenzhen main boards, it said.