Judging by the early tabulations, Hong Kong looks to become the top spot on the globe in 2006 for raising money in initial public offerings, edging London and New York. Clearly, some people are making a lot of money, banking that China's economic surge will continue.
As a reporter, I love a good initial public offering. Not for the money, but for the moments of truth-telling and market info that can be discovered.
For example, if you crunch some numbers in the December IPO of injection press maker Haitian Group Co., you see that about 52,000 injection presses were sold in China in 2005. That's down from 61,700 in 2004, but in the roller coaster of China's market, it's still up from 51,100 in 2003.
Considering that the U.S. market buys 3,500-4,000 presses a year (albeit more sophisticated machines), it's clear why people put up with the possibility of losing their shirts - and their intellectual property - for a chance at China.
I also like the way IPOs have of making companies a little more introspective.
Companies always say they have ``world-class'' technology or, as Ningbo, China-based Haitian said at NPE in June, equipment that's ``loaded'' with extras. But having to ask the public for money (and pass muster with regulators) has a way of toning that down.
Haitian, for example, cautions in its filing that among its higher technology machines, it ``will require additional effort and resources to reach the advanced technology level of top-tier international players.'' Not the kind of quote you'd find in a sales brochure.
I'm not picking on Haitian, the world's largest injection machine maker by volume. Other Chinese press makers I've talked with regard the company as a formidable, deep-pocketed competitor that is among China's leading exporters.
And Haitian's IPO is very detailed compared with others, with solid information on research and technology initiatives.
An IPO can offer a thorough look at strategy. Haitian seems to be fighting on two fronts, bulking up with massive new factories to dominate its home market (where it claims a 60 percent share of the large-tonnage press market), while it tries to develop technology to stake a claim globally.
That's different than one of its large competitors - Hong Kong-based Cosmos Machinery Ltd., which is focusing heavily on technology research and diversification rather than new capacity, as it sees China's market losing some cost advantages. It will be interesting to see who is more successful.
Perhaps my favorite Hong Kong IPO moment last year came with another injection press maker, LK Technology Holdings Ltd.
Buried amid glowing statements about market potential were a few paragraphs about how the company's founder, Liu Siong Song (the husband of its current chairwoman), was detained by Shanghai authorities for nine months and given a suspended sentence for his role in an import tax evasion plan at another company.
LK described the incident like this: The court found an employee of Liu ``primarily'' responsible for the tax scheme and imprisoned the employee, but said Liu was an ``accomplice'' because he didn't stop the employee.
Maybe some of the Enron executives should have studied that defense.
I can't wait for the next IPO.
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Toloken is a Plastics News correspondent based in Hong Kong.
