Initial public offering (IPO) activity in Taiwan may stage a rebound in the second half of the year, compared with the sharp decline in the number and value of deals seen over the past six months, Ernst & Young said in a report last week.
“The IPO market will fare stronger in the second half as several companies in the healthcare, tourism, retail and technology sectors have applied for primary listing on the local bourse,” Ernst & Young assurance partner Ian Wang (王彥鈞) told a media briefing on Thursday.
In the first half of the year, Taiwan Stock Exchange Corp (台灣證券交易所) reported only five IPO deals: Casetek Holdings Limited (鎧勝), Airmate International Co (艾美特), Sinher Technology Inc (鑫禾科技), Nan Liu Enterprise Co (南六企業) and Scientech Corp (辛耘企業), the report showed.
The IPOs raised a total of NT$4 billion (US$132.8 billion), representing a decrease of 38 percent from the same period last year, Wang said.
Meanwhile, the over-the-counter Gretai Securities Market (檯買賣中心) saw 10 IPO deals that attracted a total of NT$1.93 billion, a decrease of 63 percent from a year ago, he added.
The sluggish performance is in line with the region’s weaker-than-expected economic recovery and the zero IPO activity seen in China as it retains the suspension of A-share listing applications it initiated in November last year, Ernst & Young managing partner Kim Chang (張嵐菁) said.
Chang said she is cautiously optimistic about an IPO comeback in the second half, because China is likely to lift its suspension and the IPO high season in Hong Kong — normally the last four months of the year — is approaching.
Small-cap companies are likely to dominate the Chinese IPO market once it reopens, while other Chinese enterprises would likely resume applications to list on the US bourse, Chang said.
Ernst & Young said about 50 firms were expected to apply to be listed on the Taiwan Stock Exchange this year and an equal number would seek to debut on the over-the-counter market.
Changes to the capital gains tax on securities investments would not have much impact on IPO interest because only investors who sell a large volume of shares are to be subjected to the 15 percent levy, Wang said.
IPO applications are gaining speed, with four companies making moves last week alone, after the uncertainty over the levy was settled, Chinese-language media said.
Globally, IPO activity has held relatively steady, with 151 deals reported in the second quarter, five less than three months earlier, but an increase of 40 percent in terms of proceeds on the back of recovering confidence, Ernst & Young said.
The US market topped other bourses in terms of number of deals in the period from April to last month, followed by the Greater China area, in spite of the standstill in IPO activity in China, the report said.