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Reuters Summit-UBS says time is ripe for equity raising in China

Published 09/01/2009, 05:01 AM
Updated 09/01/2009, 05:06 AM
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BEIJING, Sept 1 (Reuters) - UBS has a series of Chinese equity-raising deals in the pipeline and expects a strong third quarter despite the recent plunge in the Shanghai stock market, a senior investment banker told Reuters on Tuesday.

Abundant liquidity and relatively stable valuations should help keep a steady stream of share issues coming from Chinese companies for the time being, said Philip Partnow, deputy head of UBS's investment banking department in China.

"There will be some more deals, which we cannot talk about just yet, coming out in the near future. So it is turning into a very active and busy period," Partnow told the Reuters China Investment Summit.

"It will be a very active third quarter and we hope that will continue into the fourth quarter," he said.

Among its biggest China-related deals in the past month, UBS was appointed to sponsor a $2.9 billion Hong Kong listing by China Minsheng Banking Corp <600016.SS> and to help arrange a share sale by China Pacific Insurance <601601.SS> in Hong Kong.

Partnow said China's equity capital markets had recently crossed an inflection point after a subdued start to the year.

"In the last four to six weeks, there has been a real noticeable increase in the overall level of equity capital markets activity," he said.

The spurt in initial public offerings (IPOs) and share placements have coincided, however, with a sharp sell-off in China's domestic stock market.

The Shanghai Composite Index <.SSEC> dropped 21.8 percent in August after recording seven consecutive monthly gains, raising doubts about how long the equity markets will be able support capital raising activities.

"The deals we launched this week and the deals we are getting ready to launch -- we are quite confident they will get done," Partnow said.

"Now, exactly how long does that window stay open? That is very hard to tell. We are hopeful, we are optimistic, but that is anybody's guess." (Reporting by Simon Rabinovitch and Michael Wei)

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