HK becomes companies’ new favorite IPO attraction

Hong Kong is becoming a new favorite attraction for mainland Chinese companies seeking financing at a time when domestic stocks remain depressed for years, and companies listed overseas have been frequently targeted by short sellers.

Forty-one Chinese companies turned to the HK Main Board for IPOs, raising as much as 36.42billion yuan in the first eleven months of 2012, almost 94% of all overseas financing.

China's largest property insurer, People's Insurance Company of China(PICC), made its debut on the HK stock exchange on December 7th, raising $3.1billion before an exercise of green shoe lift the total funds to $3.6billion.

Only four days later, China International Marine Containers Co.(CIMC), the world's largest maker of container ships by output, became the first Chinese company to transfer its listing to HK from China's B-share market after receiving approval from the Hong Kong stock exchange to list in the city.

Mainland property developers, including CIFI Holdings (Group) Co. Ltd. and Future Land Development Holdings Limited had led a wave of IPOs on the HK market in the second half of 2012.

The HK market which is more mature, effective and independent is attracting increasing companies from the mainland of which some also hope a Hong Kong listing would also help internationalize their businesses.

The uniqueness of Hong Kong's position makes the place an ideal platform for global companies to meet with their investors from China, according to the Greater China IPO Watch 2011 by PricewaterhouseCoopers (PwC).

In 2011, nine foreign companies sought to raise funds in HK, testifying to the territory's increasing importance and popularity as the listing destination of choice for multinational corporations.

Only two Chinese companies have had IPOs in the U.S. this year while over forty companies had delisted from the U.S. market following a string of fraud scandals and attacks from short sellers like Muddy Waters and Citron.

Meanwhile, China's A-share index has been the worst performing major equity market this year as it hit a three-year low.

The benchmark Shanghai benchmark index went to a 45-month low of 1991.17 on November 27th, the first time to fall below 2,000 points since 2009.