Taiwan’s initial public offering (IPO) activity might not pick up in the second half, following a poor showing in the first half, as the depressant effects of a lack of high-profile deals and growing competition from the Chinese market persist, accounting firm Deloitte & Touche said yesterday.
The first half saw 21 local and foreign-registered firms list on the Taiwan Stock Exchange and the Taipei Exchange (TPEX) in deals which raised a total of NT$7.313 billion (US$239.85 million), representing a 22 percent decline from the money raised by deals made in the same period last year, the international consultancy’s local branch said.
The retreat came as the TAIEX rallied to a 17-year high and daily turnover gained 19 percent to NT$117.2 billion over the same period, Deloitte Taiwan managing partner Benjamin Shih (施景彬) said.
“The IPO market is relatively quiet this year despite an improving economic environment at home and abroad,” Shih told a news conference.
Only 19 IPOs are in the pipeline and the total number of deals this year is likely to be lower than the past several years, Shih said, adding that there were 57 offerings for the whole of last year.
Shih, whose company commands a 60 percent market share in IPO consultations and 30 percent in accounting certifications, attributed the low activity to a lack of well-known applicants.
Biotechnology firms accounted for 42 percent of IPO activity in the first half, followed by manufacturers at 19 percent and high-tech firms at 19 percent, Shih said.
Senhwa Biosciences Inc (生華科), which researches and develops cancer treatments, posted the largest IPO deal this year on the Taiwan Stock Exchange, but raised a modest NT$1.424 billion, Deloitte’s semi-annual report showed.
Shin Foong Specialty & Applied Materials Co (申豐), which makes and sells styrene-butadiene rubber and nitrile products, outpaced its peers on the TPEX with an IPO that raised NT$723 million, the report said.
Except for a few heavily weighted firms such as Largan Precision Co (大立光), Taiwan Semiconductor Manufacturing Co (台積電) and Hon Hai Precision Industry Co (鴻海精密), a general upswing in stocks has failed to benefit local shares much, judging from their price-to-earnings ratios, Deloitte IPO committee leader Steven Hsieh (謝明忠) said.
By contrast, firms in China enjoy high price-to-earnings ratios and a bright fund-raising outlook now that global stock benchmark provider MSCI Inc has decided to add A-shares denominated in yuan starting from May next year, Hsieh said.
Taiwan could make its capital markets attractive by cutting stock dividend income taxes, Deloitte tax managing partner Austin Chen (陳光宇) said.
The Ministry of Finance has indicated it plans to revise stock dividend income rules, but has yet to come up with a draft bill.
Deloitte Taiwan supports a scheme that would allow investors to opt for a flat 25 percent tax on stock dividend incomes or follow the current progressive income tax rates, depending on which is more favorable.
The scheme is simple and more efficient, compared with other measures introduced by a research body at the ministry’s request, Chen said.
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