US IPOs may rebound in 2013

Chinese companies' IPO activity in the US might recover in 2013, bolstered by the stabilization of the global economy and the recovery of US investor confidence, consultancy ChinaVenture said Tuesday.

Investing in Chinese companies is still a good option for US investors, as China's economy has been rebounding since the third quarter of 2012, the company said in a report sent to the Global Times Tuesday.

If big Chinese companies such as online retailer 360buy.com succeed in making US debuts next year, it will help boost investor confidence, the report said.

Besides the US, European markets will also become hot IPO destinations for China's small and medium-sized enterprises, it said.

So far this year, only two Chinese companies - online retailer Vipshop Holdings and social media company YY Inc - have debuted in the US, the lowest record since 2003.

The two companies raised a total of $153 million, down 90 percent from the amount China-based companies raised through US IPOs during the same period a year ago, according to ChinaVenture.

Stock prices of Vipshop and YY closed at $17.90 and $14.29 in Monday trading, far higher than their IPO prices of $6.50 and $10.50 respectively.

"The two Chinese companies' stock performance has helped boost US investor sentiment to some extent, but earlier this month, the US Securities and Exchange Commission accused the Chinese affiliates of five top auditing firms of securities violations, and that has again triggered market concern over future US listings," said Zhong Rixin, an analyst at imeigu.com.

US-listed Chinese companies have faced a credibility crisis in the US since 2011 when some of them were accused of accounting fraud, which has led to a spate of withdrawals from the stock market. A total of 25 US-listed Chinese companies have finished privatization or are in the process of privatization so far this year, according to imeigu.com.

In contrast, nine Chinese companies have launched IPOs in European markets such as the Frankfurt Stock Exchange and the London Stock Exchange (LSE) so far this year,

But Zhong said the US is still the first-choice IPO destination. "Companies can raise more capital from the US market, and the US stock market's liquidity is better than its counterparts in Europe," he noted.

For instance, Global Market, a business-to-business e-commerce service provider in China, made a debut on the LSE in June, but only raised around 100 million yuan ($16 million).

Zhong expects that the Sino-US dispute on auditing issues may finally be solved through government-level negotiations, but said it will take at least a year to restore investor confidence.