Shanghai Stock Exchange to overtake Hong Kong counterpart in 2010

The international board that will allow foreign companies to sell shares denominated in the Chinese currency may help the Shanghai Stock Exchange (SSE) to raise up to Rmb300 billion ($43.95 billion) through initial public offerings this year, overtaking its Hong Kong counterpart, which is forecast to raise HK$300 billion ($38.96 billion), PricewaterhouseCoopers said yesterday.

In an effort to open up markets and lower the barriers to entry -- a move it hopes will attract overseas capital -- China is planning an international trading board in Shanghai, which PricewaterhouseCoopers believes will be launched by the second half of 2010.

"If the board starts at a good time with good market sentiment, it will give a big boost to the SSE and may even enable it to overtake the Hong Kong stock exchange," said Edmond Chan, a partner with the firm's capital market services group.

Excluding the contribution from the international board, the total funds raised through new IPOs in Shanghai will be Rmb250 billion, Chan told reporters at a press conference in Hong Kong. There will be 15 companies selling shares for the first time in Shanghai, he predicted.

A couple of weeks ago Ernst & Young gave an even more optimistic forecast, suggesting that the SSE may raise Rmb380 billion through 30 to 40 new IPOs in 2010, outperforming Hong Kong.

The Agricultural Bank of China (ABC) will reportedly seek a dual listing in Shanghai and Hong Kong this year, raising up to $35 billion, with 60% of the shares sold on the Shanghai bourse and 40% on the Hong Kong stock exchange.

Along with approximately 103 small- and medium-size companies that are expected to raise an estimated Rmb70 billion by listing on the Shenzhen bourses, the stock exchanges in China will see a combined Rmb320 billion worth of new share listings this year, according to PricewaterhouseCoopers.