China First-Time Stock Sales May Set Record, PWC Says

First-time stock sales in China, the world's largest market for such offerings, may break last year's record in 2008 as more companies traded in Hong Kong are allowed to sell shares on the nation's bourses.

The value of initial public offerings will grow to 480 billion yuan ($66 billion) this year from $63 billion in 2007, PricewaterhouseCoopers LLP said yesterday. PWC's estimates for Chinese IPOs include stock sales in the nation by China- incorporated companies already traded in Hong Kong.

Companies raised more money selling stock in China last year than in the previous six years combined, as the government urged state-owned firms listed in Hong Kong to raise domestic funds. This year, companies incorporated overseas and traded in Hong Kong - so-called red chips - may be allowed to sell yuan shares, keeping the flow of offerings up.

"The next wave will be the red chips," said Richard Sun, a Hong Kong-based partner at PWC, in an interview with Bloomberg TV. "We predict in the second half, there will be green light from the central government to allow red chips in Hong Kong going back to China for the first time."

PetroChina Co., the nation's largest oil company, raised 66.8 billion yuan in a November stock sale in Shanghai that turned it into the world's biggest company by market value. The stock had been traded in Hong Kong since 2000.

Red Chips

Last year's combined tally for the Shanghai and Shenzhen exchanges put China ahead of New York and London in IPO fundraising, PWC said. So-called H-share companies such as PetroChina accounted for almost three-quarters of money raised in first-time sales in Shanghai last year, said Sun.

H-share companies will make up a smaller share of yuan- denominated offerings this year, he said.

Red-chip companies include China Mobile Ltd., the world's largest telephone carrier by market value, and Cnooc Ltd., China's third-biggest oil company. China Mobile is "actively" seeking a listing on the mainland, Chairman Wang Jianzhou said in November.

Liu Shian, vice president of the Shanghai exchange, was cited by the China Securities Journal in November as saying China should speed up the process of allowing red chips to list on the city's bourse.

For the past decade, Hong Kong has served as the main fundraising center for large Chinese companies, a status that's being challenged by Shanghai. IPOs in Hong Kong may raise a combined HK$280 billion ($35.8 billion) this year, 5 percent less than in 2007, PWC estimated.

Still, PWC's estimates suggest a slowdown in the growth of China first-time sales. The value of initial stock sales on mainland exchanges, including those by companies already traded in Hong Kong, almost tripled to 446.5 billion yuan last year, according to data compiled by Bloomberg.