Initial public offering (IPO) activity is likely to be flattish this year compared with last year and some firms might postpone listing applications if local equity markets disappoint, accounting and consulting firm PricewaterhouseCoopers (PwC) said yesterday.
Between 50 and 60 firms might seek an IPO on the Taiwan Stock Exchange and Taipei Exchange this year, about the same as the 58 listings last year, PwC Taiwan assurance leader Joseph Chou (周建宏) told a media briefing in Taipei.
The forecast assumes a lackluster TAIEX to reflect a continued economic slowdown in Taiwan that might weigh on IPO interest, Chou said.
Chou said he expects the economy to perform similar to last year, bucking prevalent expectations that GDP growth might improve to 2 percent from an estimate of 1 percent.
Taiwan’s growth outlook is continuing to be challenged by growing competition from China and further interest rate hikes from the US Federal Reserve, Chou said.
The former could lead to the delisting of some Taiwanese technology firms and the latter might raise funding costs, Chou said.
Against this backdrop, it is unlikely that the TAIEX would stage a robust comeback this year, Chou said, adding that the probability of a crash is low given the low price-to-earnings ratios.
The ratios averaged between 10 and 15 percent for IPO firms last year and would be more attractive if they could rise by another 5 percent, Chou said.
Technology and biopharmaceutical firms would continue to dominate the capital markets this year, while players from creative industries and other sectors have yet to gain significant importance, he said.
Customers that postponed applications last year have voiced plans to take action this year, Chou said.
Some could choose to stay on the sidelines or scrap IPO plans altogether if the capital markets remain sluggish, which makes them unfavorable for raising funds, Chou said.
The main trading index yesterday fell 2.68 percent to 8,114.26 points on a small trading volume of NT$76 billion (US$2.28 billion), after losing 10.41 percent last year, Taiwan Stock Exchange data showed.
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