China's IPO market the world's biggest despite slump

An electronic board showing stock information is seen at a brokerage house in Shanghai September 20, 2011.

SHANGHAI (Reuters) - China remained the world's biggest IPO market in 2011, even as total funds raised slumped from the previous year due to global economic uncertainty, undercoring the shift of financial power from the west to the east.

Chinese firms raised a combined 286.1 billion yuan ($45.5 billion) through initial public offerings in Shanghai and Shenzhen last year, 41 percent less than in 2010, accounting firm PricewaterhouseCoopers (PwC) said. Still, China outshines the United States and Hong Kong in terms of IPO fundraising.

PwC forecast that China's IPO market would remain at the same level in 2012, raising 270-300 billion yuan, even as the market faces headwinds including weak investor demand and price volatility.

"Many Chinese companies are preparing for IPOs and waiting for the right time to go public," Frank Lyn, PwC China Markets Leader, told a press briefing.

"IPOs in Shenzhen ... will remain active in 2012," he said, adding that the IPO market will be driven by sectors including industrial products, retail, consumer goods and services, as well as financial service.

China's IPO market, which saw a total of 282 new listings in 2011, had cooled from the previous year due to a sluggish stock market that slumped 22 percent amid growing economic uncertainty and the lingering euro zone debt crisis.

A number of companies postponed their IPOs or slashed their fundraising target due to weak demand while 27 percent of newly-listed companies last year closed below their IPO price on the first day of trading.

"It is rational that the IPO market cools down after a blowout in 2010," said Jean Sun, a partner at PwC China.

Still, China's IPO market last year, worth 286 billion yuan, was the biggest in the world. Hong Kong's IPO market raised 220.7 billion yuan during the same period, while the U.S. market was worth 224.3 billion yuan, PwC said.

China also had the world's biggest IPO market in 2010, when the number of Chinese IPOs more than tripled from the previous year to 349, while the amount of IPO funds raised more than doubled to 488.3 billion yuan.

($1 = 6.2940 Chinese yuan)

(Reporting by Samuel Shen and Jacqueline Wong)