Taiwan’s capital market could continue to increase its number of initial public offerings (IPO) next year after recording an annual 17 percent jump this year on a backlog of companies seeking investment funds, a report by Ernst & Young said yesterday.
“The growth momentum in the local IPO market remains dynamic going forward,” James Wang (王金來), country managing partner at the international consultancy firm, told a media briefing.
The trend will sustain whoever wins the presidency on Jan. 14, although the pace may slow down if the European debt crisis worsens, making fundraising more difficult, Wang said.
A total of 42 overseas companies are awaiting regulatory approval to list on the local bourse, Wang said, citing Taiwan Stock Exchange statistics.
“If things proceed as planned, the number of IPO launches by foreign firms may exceed that by domestic companies next year,” Wang said.
The government has lent support with eased regulations, said Ian Wang (王彥鈞), a partner at Ernst & Young assurance services.
The government’s recent scrapping of the face-value requirement on foreign firms’ stocks is giving Japanese, US and Singaporean firms a further incentive to list in -Taiwan, although the easing will have little impact on Taiwanese firms in China, Ian Wang said.
The relaxation will save foreign firms the trouble of setting up shell companies in third places to qualify for listing in Taiwan, although such practice is prevalent among Taiwanese firms with operations in China, Ian Wang said, adding that consequently, the latter will not benefit from the policy change.
About 50 firms are expected to apply to list on the emerging stock market, from 45 this year, Ian Wang said, citing the GRETAI Securities Market.
However, Ernst & Young predicted that Taiwan depositary receipts (TDR) will further lose -appeal next year after the number of TDR withdrawals hit a new high this year because of more reasonable estimates of their worth, Ian Wang said.
Further, TDR issuers voiced difficulty adjusting to Taiwan’s monthly earnings disclosure requirements when they need to do so twice a year in other markets, Ian Wang said.
So far this year, the local capital market has recorded 48 IPO deals, compared with 41 for the whole of last year, the report said.
The listing of Tokyo-based chipmaker Elpida Memory Inc’s depositary receipts in Taiwan tops the deals in terms of the capital raised at NT$4.26 billion (US$140.66 million).