Only six companies launched initial public offerings (IPOs) on the Taiwan Stock Exchange in the first half of the year, half as many as during the same period last year, international consulting firm Ernst & Young said at a media briefing in Taipei yesterday.
The six IPOs raised NT$8.7 billion (US$279.6 million), a 48.3 percent increase year-on-year, with Wiwynn Corp (緯穎), a subsidiary of Wistron Corp (緯創), raising NT$5.96 billion, Ernst & Young said.
Ernst & Young assurance head Lin Tu (涂嘉玲) said the increase in raised capital contrasted with the decrease in the number of companies could reflect the rising importance of “quality over quantity.”
Another 12 companies launched IPOs on the Taipei Exchange in the first half of the year, down from 16 companies in the same period last year. They raised NT$2.75 billion, 35.7 percent less than the same period last year, Ernst & Young said.
Lin expects the number of IPOs to remain on a downward trend in the coming months.
The figures demonstrate the impact of the US-China trade dispute despite the TAIEX remaining above 10,000 points since January thanks to the support of domestic capital.
“It [the US-China trade dispute] is bringing many factors of uncertainty,” Lin said.
Several Ernst & Young clients have postponed their IPOs to solve more pressing issues related to production, such as rising costs owing to US tariffs, she said.
“They must first look to stay afloat ... relocating production sites generates high costs for companies and forces them into long-term commitments,” she said.
The consulting firm also warned about the potential depreciation of Asian currencies against the US dollar if the trade dispute drags on.
On the bright side, currency devaluation could accelerate the return of Taiwanese companies investing in the nation, propelling promising firms to launch IPOs, Ernst & Young said.
In the first half of the year, the technology sector provided 10 out of 18 IPOs, while the industrial sector followed with three and the biotechnology sector two, a report showed.
Furthermore, the technology sector also ranked first in terms of raised capital, NT$9.12 billion, surpassing all other sectors by more than 894 percent, it said.
While that showed that investors remain bullish about the technology sector, Taiwan’s biotech sector has witnessed slow progress over the past years compared with that of Hong Kong, Lin said.
Biotech firms listed on the Hong Kong Stock Exchange raised the highest amount of capital through their IPOs in the first half of the year thanks to favorable policies, she said.
“Taiwanese investors have a different approach to the biotech sector,” she said, adding that local investors have little interest in making long-term investments.
The Hong Kong Stock Exchange has courted local biotech firms to launch IPOs in the territory.
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