Funds raised from initial public offerings (IPOs) in Taiwan fell more than 30 percent annually last year, although the number of new listings on the local equity market rose slightly, according to PricewaterhouseCoopers (PwC) Taiwan.
In a report released on Tuesday last week, the accounting and consulting firm said NT$25.5 billion (US$797 million) was raised by IPOs on the local main board and the over-the-counter (OTC) market last year, a 32 percent annual decline.
Meanwhile, the number of companies that listed their shares for the first time on the main board and the OTC market last year was 60, two more than in 2015, PwC said.
The drop in the funds raised from IPOs last year was caused by newly listed companies often being small and medium-sized firms in the high-tech sector or in the cultural creative industry, the firm said.
Due to their relatively small paid-in capital, only four of the 60 newly listed companies raised more than NT$1 billion each, which pushed down the aggregate total last year, the firm said.
PwC said the performance of the new listings on the local equity market last year was the worst in five years, with 71 percent of them failing to gain 2 percent during the year.
The data defied conventional wisdom that new listings would soar largely because of the so-called honeymoon effect.
The capital market in Taiwan has been shrinking and lagging behind its neighbors in terms of IPO funds, PwC said, citing Hong Kong as an example, which raised US$25.11 billion last year, and Shanghai which raised US$15.12 billion.
Taiwan was not the only market that saw a drop in IPO funds last year, Securities and Futures Bureau deputy director Sam Chang (張振山) said.
Bureau data show that funds raised from IPOs in Taiwan in the first nine months of last year fell 48.25 percent from a year earlier, while in Hong Kong and Japan the drop was 64 percent and 54 percent respectively, Chang said.
Meanwhile, the number of firms launching IPOs could range between 55 and 60 this year, with biotech and high-tech firms dominating the new listings, PwC said.
In light of the government’s “new southbound policy,” companies in Southeast Asia are likely to launch IPOs in Taiwan’s capital market this year, the firm said.
Separately, Macquarie Capital Ltd has forecast that the TAIEX will challenge the 9,500-point mark this year, with the semiconductor sector driving the gains.
In a research note issued on Tuesday last week, the Australian brokerage said that after two consecutive years of consolidation, Taiwan’s integrated circuit industry will start gaining momentum this year and sales in the domestic semiconductor sector are likely to increase by 9 percent year-on-year on a cyclical uptrend in the memory chip business.
“We expect moderate upside to the TAIEX in 2017 driven by out performance in memory, semiconductors, automation, auto electronics, financials and defensive non-tech stocks,” Macquarie said in the note. “We remain negative on the LCD, PC, textile and footware sectors.”
The TAIEX closed at 9,372.22 points on Friday last week.
While the brokerage has forecast a rise in share prices in Taiwan this year, it has also cautioned that an interest rate hike cycle in the US and trade policy of US president-elect Donald Trump could cause volatility in the global financial markets.