more liquid Hong Kong market in the second half of 1999 after initial offerings attracted timid interest in the first half.

Only seven small firms have been floated in Hong Kong this year, raising total proceeds of just HK$421.17 million (US$54.3 million).

"The market definitely possesses the capability to support big issues and it (the response) will depend very much on pricing,'' said Andrew Look, regional director of Prudential Portfolio Managers (Asia).

"If the price is low (compared with the market average), it should generate interest,'' he said.

Corporate finance sources said New World Development Co Ltd was seen spinning off its China property arm New World China Land Ltd in July or September, raising up to HK$4 billion.

And Pacific Century Regional Developments Ltd., formerly Top Glory Insurance Co (Bermuda) Ltd, was expected to spin off its insurance arm Pacific Century Insurance Co. Ltd. later this year, raising about HK$1.5 billion.

Chinese enterprise Ningbo Beilun Port Co. has said it might pursue plans to raise up to US$200 million in an H-share listing in Hong Kong.

China National Offshore Oil Corp was expected to seek a listing in Hong Kong in the fourth quarter.

The H-share index of China-incorporated companies listed in Hong Kong surged 18.5 percent last week after China slashed interest rates in a bid to reflate its economy.

"I think the market can support (big) issues if the market has adequate liquidity,'' said Adrian Ngan, head of Hong Kong research at BNP-Prime Peregrine.

He said issues were likely to attract more support if the Hang Seng Index climbed to 15,000 and if daily turnover increased to around HK$10 billion later in the year.

Look said he viewed fund outflows in recent weeks as a short-term phenomenon and did not see this as a continuing trend.

Some analysts said poor earnings' outlooks for Chinese enterprises and on-going concerns amid a possible Chinese yuan devaluation could reduce investor interest in Chinese issues.

"The situation in China is very problematic and appetite for China issues is not that great,'' said Andrew Fernow, research director at Vickers Ballas.

"China assets are not attractively priced and there could be a lot of risk involved which might make the timing quite bad ahead of a (possible) devaluation.'' "I believe China cannot continue to operate in a deflationary environment.

They have to get out of this situation and their options are very limited,'' he added.

Look said this would not necessarily affect the IPO market and that some issues which failed to attract investors the first time around would try harder next time.

A possible relaunch of Shangdong International Power Development Co Ltd.'s postponed HK$2.2 billion float was seen if the market gained further strength, sources said.

And Heilongjiang Agriculture Co Ltd was seen considering a relaunch of its HK$1.7 billion float after postponing an attempt in January, they said.