During this financial crisis, many companies, especially those in the developing countries, which originally planned to raise capitals by issuing IPOs decided to postpone their IPO issuances or even cancelled them because their business volumes sank tremendously. They were also afraid that the plunging stock market will drag down their stock price substantially, thus negatively impacting their reputations.
Despite general fear, some companies in the developing countries are optimistic with the business outlook and entered the market when others stayed on the sideline. In particular, China has taken the lead in spreading its optimism in the stock market with the rest of the world. Its aluminum-product maker, China Zhongwang Holding Ltd., is the world’s biggest IPO ($1.26 billion) this year so far. It is followed by U.S. pediatric nutrition company, Mead Johnson Nutrition with $828 million.
Zhongwang entered the market at this time because it wants to take advantage of the Chinese government’s 4 trillion yuan stimulus program, which will spend a large portion on infrastructure construction. These railroad and transport-related projects will certainly increase the demand of Zhongwang’s aluminum products.
Hopefully, with Zhongwang’s big IPO issuance, other companies will feel more confident in the financial market outlook and resume their IPO issuances again in the rest of 2009.