More mergers, IPOs seen as China boosts reform of state-owned firms

Singapore

CHINA'S push to deepen the reform of state-owned enterprises (SOEs) in a "Singapore-inspired" manner is set to spark off more merger and acquisitions (M&As) and a deluge of initial public offerings (IPOs).

This may be reminiscent of the slew of mega IPOs by giant SOEs including those of China's largest banks on mainland Chinese and Hong Kong bourses some 10 years ago.

"The return of large IPOs will put some pressure on capital allocated in the secondary market. In the short-term, we may see some wobble," BNP Paribas analyst Manishi Raychaudhuri told BT. "But over the long term, if reforms are done properly and successfully, they will be positive for the market as a whole."

Joseph He, partner at WongPartnership, felt that while it may be premature to gauge if this round of reforms will toss up more M&A and IPO opportunities, it is likely that the change in incentive mechanism could stoke more deal flows, particularly in competit…