Hong Kong continues to be a favorite destination for fundraising by global mining and natural resources companies, with as many as 15 IPOs in the pipeline next year, according to a report by PricewaterhouseCoopers (PwC).

The accounting firm predicted as many as 15 overseas and mainland mining and natural resource companies to list in Hong Kong in 2012. It added that this trend will gather momentum when global economic uncertainty subsides and market confidence returns.

"Global mining and resources companies are eager to seek a dual or secondary listing on the local bourse as they want to enhance their brands in the mainland market," said Benson Wong, mining leader and assurance partner of PwC Hong Kong.

Wong said that approximately one-third of the 15 mining and natural resources company IPO candidates in 2012 will come from overseas while the remaining two-thirds will be mainland-based. These overseas resources companies come from Canada, Russia, Mongolia, South Africa and Indonesia.

The Hong Kong stock market has witnessed a flurry of IPO activities by global resources companies since 2010. Russian aluminum firm Rusal had the third largest IPO in the city in 2010. Other resource companies such as Canada's SouthGobi, Brazil's Vale SA and Switzerland-based Glencore all made their debuts in the local share market.

According to PwC, the number of mining and resources-related IPOs have decreased in 2011 compared with 2010, from 22 to eight through the first three quarters. But the funds raised so far in 2011 have increased from HK$68 billion in 2010 to HK$94 billion.

Wong is bullish on the attractiveness of HKEx because of robust demand for commodities on the mainland.

"As the mainland's economy is tipped to grow annually by 7 to 8 percent in 2012, this staggering economic growth rate will represent a continuous demand for commodities, thus luring more global resources companies to establish their first footholds in the mainland market. The local capital market is poised to be the ideal location for public listings because of its proximity to the mainland market," Wong said.

As of September 2011, the total capitalization of local-listed resources companies amounted to HK$2,800 billion, representing 17.3 percent of the total capitalization of the local share market, according to HKEx data.

oswald@chinadailyhk.com

China Daily

(HK Edition 12/01/2011 page2)