The local capital market may see a healthy rebound in initial public offering (IPO) interest next year as the world emerges from the economic slowdown, a semi-annual report by Ernst & Young said yesterday.
The number of IPO deals on the Taiwan Stock Exchange Market is expected to total 22 this year, falling an estimated 54 percent from last year, as global uncertainty and unfavorable government policies slowed fund-raising activity, Ernst & Young assurance partner Ian Wang (王彥鈞) told a media briefing.
Firms that proceeded with primary listing plans raised about NT$13.19 billion (US$453.2 million), down 55 percent from last year, Wang said.
The over-the-counter GRETAI Securities Market held up better, with IPO funds slipping only 4 percent to NT$11.32 billion this year and the number of cases retreating 18 percent to 42, the report indicated.
Looser requirements rendered this bourse less vulnerable to market volatility, Wang said.
“The worst seems to be over now that the economy has showed signs of stabilization at home and abroad,” he said.
The situation may improve next year with GDP growth forecast by different research institutions to top 3 percent, three times stronger than this year, and IPO deals predicted to increase 20 percent from this year, according to the consultancy.
The biotechnology sector is likely to lead the comeback as it did toward the year-end on the back of regulatory easing in Taiwan and China as well as growing demand for new drugs and health care, Wang said.
An estimated 11 biotech firms would make primary listing in local markets this year, accounting for 18 percent of IPO deals, the report found.
James Wang (王金來), country managing partner at Ernst & Young Taiwan, said concerns over the upcoming capital gains tax including IPO levy would subside significantly after companies conduct cost analyzes.
Starting next year, investors who sell more than 10,000 shares from initial public offerings in the main bourse or 100,000 shares in the emerging market are subject to 15 percent capital gains tax.
“The extra tax burden is bearable compared with the benefits companies can reap from higher share prices in the wake of listing,” James Wang said, adding that some 60 firms have expressed interest with underwriters to list next year.