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By Jason Simpkins
As the U.S. market falters amid credit worries and a disastrous housing slump, emerging markets are picking up the slack. Investors abroad are reaping huge profits from initial public offerings (IPOs), which have yet to break stride this year. Year-to-date, more than half the record $255 billion raised through IPOs came from emerging markets.
China tops the IPO leader board, accounting for 27% of all global stock listings so far this year. In Shanghai, 195 listings have generated more than $87 billion. That's more than double the $38.5 billion raised by 174 U.S.-based IPOs.
So, it was hardly a surprise when PetroChina Ltd. (PTR) became the world's largest company by market cap last month after its Shanghai debut raised a record $8.94 billion. Not to be outdone, Alibaba.com Ltd. saw its shares nearly triple after listing in Hong Kong. Shares bolted 290% to give the company a market value of $25.7 billion. When it was all said and done, Hangzhou-based Alibaba had raised $1.5 billion, the most ever for a China-based Internet company.
China Railway Group became the latest Chinese success story when it raised $3.03 billion (22.44 billion yuan) from the sale of 4.675 billion Class A shares in November. The company raised an additional $2.46 billion last week in an IPO of Class H shares ahead of a listing in Hong Kong set for Friday.
Soon, China Pacific Insurance, the nation's third-largest life insurer, will take its turn at the wheel. It plans to raise about $6 billion through offerings in mainland China and Hong Kong.
Despite all the success China has had, Brazil, India, and others aren't far behind. India's Mundra Port & Special Economic Zone Ltd. has skyrocketed 121% since its IPO last week. In Brazil, trading has expanded six fold since 2000. As a result, Bovespa Holding SA, owner of Brazil's largest stock exchange, is up 42% since it started trading Oct. 26.
"People are uncertain about the growth outlook in developed markets, but they can certainly see plenty of growth potential in emerging markets," Alex Tedder of American Century Investments told Bloomberg News. "These things are in great demand."
Emerging markets such as China, India and Brazil will grow 7.4% next year, compared to a 2.2% rate for industrialized nations, according to data compiled by the International Monetary Fund.
In the first nine months of 2007, emerging market IPOs locked in a total $98.4 billion, versus the $89.2 billion from developed nations. IPOs from emerging nations have raised $35.4 billion this quarter alone, compared to the $32.7 billion raised by IPOs from developed countries.
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