The Shanghai Stock Exchange (SSE) is expected to overtake Hong Kong as the world's largest center for initial public offerings (IPOs) in 2010 and is forecast to raise 380 billion yuan, according to a report released yesterday by accounting firm Ernst & Young.

"With the economy and the capital markets becoming more stable, coupled with a strong IPO pipeline and market liquidity we forecast that for the SSE alone, IPO value will increase more than two fold in 2010 than this year," said Philip Leung, regional managing partner of China Central, Ernst & Young.

The Shanghai exchange, the bigger one of the mainland's two stock markets, raised $14 billion in the first 11 months of this year, becoming the world's third largest center for IPOs after the Hong Kong Stock Exchange and the New York Stock Exchange.

Ernst & Young projected that the mainland's major bourse will raise a total of 118 billion yuan through IPOs this year, up 62 percent from 2008's 73 billion yuan.

The China Securities Regulatory Commission lifted a ban imposed on IPOs in June after freezing the fund-raising channel for over nine months due to the financial crisis.

The Shanghai bourse is expected to end 2009 with nine IPOs, up from five in 2008, led by the world's second largest IPO by China State Construction Engineering Corp (50.1 billion yuan), and topped by Brazil-based lender Banco Santander SA. The China home builder made its debut in Shanghai on July 29.

Construction and financial sector IPOs lead the Shanghai exchange by sector, and raised 71 billion and 22 billion yuan respectively so far this year.

Yuan Yongmin, partner of assurance services at Ernst & Young, pointed out that going into 2010, financials and industrials will remain the hottest sectors by total funds raised in Shanghai.

As for the Shenzhen Stock Exchange, the mainland's smaller bourse, it's estimated to attract 90 IPOs worth 58 billion yuan this year, compared with 31 billion yuan last year.