The local bourse’s sluggish trading sapped initial public offering (IPO) activity in the first half of this year, with capital raised falling 52 percent from the same period last year, a report by Ernst & Young showed yesterday.
The retreat in IPO interests thwarted Taiwan’s efforts to develop into a regional fund-raising hub, Ernst & Young assurance partner Ian Wang (王彥鈞) told a media briefing.
Wang said firms also called off IPO bids amid unease over the global economic uncertainty and the government’s capital gains tax plan.
“The [IPO] landscape ahead appears rugged, unless the eurozone shows signs of stabilization and concerns over unfavorable tax policy [in Taiwan] dissipate,” Wang said.
Several clients called off or postponed IPO attempts in the second half of last year and the trend continued in the past six months, Ernst & Young managing partner Kim Chang (張嵐菁) said.
The January-to-June period saw eight IPO deals on the Taiwan Stock Exchange (TWSE) with capital raised totaling NT$7.25 billion (US$242 million), the report said, citing TWSE statistics.
That meant a steep decline of 52 percent, compared with NT$15.09 billion raised in 13 deals during the same period last year, the report found.
China-based retailer Grand Ocean Department Store Group Co (大洋百貨) led the pack with NT$2.4 billion raised, followed by local restaurant operator Wowprime Corp (王品集團) with NT$1.98 billion, Hong Kong-based agrochemical maker Rotam Global AgroSciences Ltd (龍燈環球農業科技) with NT$1.02 billion and Taiwanese vaccine developer Adimmune Corp (國光生技) with NT$742 million, according to TWSE data.
“The TWSE’s estimate of 19 IPOs by foreign companies in Taiwan this year appears unachievable” given the weak showing so far, Wang said.
The projected number is the sum of the previous two years’ IPO activity as Taiwanese authorities aggressively seek to invigorate local capital markets.
James Wang (王金來), country managing partner at the international consultancy firm, said the goal has a slim chance of being realized, unless the TAIEX recovers the 8,000-point mark, with a turnover of NT$100 billion.
The main index closed up 1 percent to 7,418.36 on a trading volume of NT$77.06 billion yesterday, TWSE data showed.
Individual investors would have to pay taxes on actual IPO gains if they hold more than 10,000 shares in newly listed firms, in terms of the capital gains tax proposal that might clear the legislature in a special session planned for the end of this month.
The GRETAI Securities Market (GTSM) held up better as it saw 19 deals raising a total of NT$5.27 billion in the first half, up from NT$5.1 billion in 23 deals a year earlier, data showed.
Ernst & Young forecast that few foreign companies, if any, would issue Taiwan depositary receipts in future, after the delisting of Tokyo-based chipmaker Elpida Memory Inc raised accountability concerns, Ian Wang said.
He expects firms in the biotechnology industry to dominate the local IPO market in the second half of the year.