China’s equity capital market has been boosted by Taiwanese corporates over the last 16 months.
In order to benefit from a larger market, Taiwanese companies are increasingly looking to raise funds through China’s IPO market. Since June 2016, seven Taiwanese companies have completed debut IPOs in China and Hong Kong, raising a combined total of $438.78 mn.
Since then, the seven newly listed companies have seen an average increase of 134 percent in stock price, while during the same period newly listed companies on the Taiwan Stock Exchange recorded average stock price increases of 28 percent.
Fundraising capability is another reason for the corporate flight to China: data from EY shows that 246 companies completed IPOs in the A-share market in the first half of 2017, raising $19.25 bn. This is 79 times greater than the amount raised in the Taiwanese equity capital market.
From an investor’s perspective, unfriendly tax rates in Taiwan are also a deterrent to participating in the secondary market.
The wider Asia-Pacific region accounted for 65 percent of the 330 IPOs and 49 percent of the capital raised globally in the third quarter, according to EY. By comparison, stock exchanges in the US accounted for 8 percent of global IPOs by volume and 9 percent by proceeds.
‘The IPO market right now is really hot, with some large deals that will provide the catalyst for some other good companies to come over to Hong Kong,’ says Ringo Choi, Asia-Pacific IPO leader at EY in China.
