Asia IPO Boom 'Not One-Way Ticket' to Profits
Following a boom in Asian initial public offerings (IPO) this year, investors will be more discerning in 2010 as they scrutinize these offerings more closely, said Mark Konyn, CEO of RCM Asia Pacific.
"This is not a one-way ticket," Konyn said on CNBC's Cash Flow.
When China lifted a moratorium on IPOs from September 2008 through to June this year, the sentiment was euphoric, Konyn noted.
"There was a general euphoria surrounding the lifting of that moratorium plus the excessive bank credit creation in the first 7-8 months of the year. These things came together and the result was extreme enthusiasm for new listings," he said.
Companies have raised nearly $52 billion from initial public offerings on exchanges in Hong Kong and mainland China so far this year, according to financial research firm Dealogic. That's about twice as much as the some $26.5 billion in American IPOs in the same period.
Hong Kong alone has drawn more than $27 billion this year, making the southern Chinese financial center the world's top city for equity capital raising for the first time, according to Dealogic's records dating to 1997.
But as the year comes to an end, investors are becoming more wary and "a little bit tired", Konyn continued. "There's also some sense that the pricing on selective IPOs has been a little bit aggressive."
"As we now go into 2010, the prospect of more tightening measures taking place from the PBOC (People's Bank of China), plus the issues that you've seen surrounding property, means that people will be a little bit more discerning."