RSS Feed (xml)
but analysts warned that cooling economic optimism and overpricing
has been responsible for a series of disappointing debuts.
Companies forced to shelve their listing plans after the US financial
crisis set in had been tempted back by a rally of about 80 per cent
since early March on the benchmark Hang Seng index. But amid signs
the US economy is not picking up as quickly as previously thought,
that optimism is tailing off, just as dozens of Hong Kong firms are
preparing to launch their IPOs. The three firms listing Thursday—
Ausnutria Dairy, China Vanadium Titano- Magnetite Mining and Yingde
Gases— will be hoping they do not follow Shenzhen-based logistics
firm China South City Holdings which dived 23 per cent. According
to data company Dealogic, that debut last week was the worst ever on
the Hang Seng for a listing over 50 million US dollars. In recent
days there have also been disappointing showings from China's
Glorious Property, which sunk 14.5 per cent, and Peak Sport which
fell 17.1 per cent. Engineering and construction firm
Metallurgical Corp of China, Hong Kong's biggest public offering this
year, planned to raise up to 2.9 billion US dollars, but the stock
lost 14.1 per cent on its launch last month. And despite rising 28
per cent on its Shanghai debut days before, it soon fell back to just
a little above its listing price the day after. Eric Yuen, head of
research at Dao Heng Securities, blamed aggressive pricing conceived
at a time when the market was touching 2009 highs in September.
'(Companies) took advantage of bullish market sentiment and many
were priced at a premium to their competitors,' he said. Private
investors guided more by prevailing market sentiment than optimism
about an individual company's prospects also helped fuel inflated
prices, analysts said. 'The market had a huge run-up and a lot of
retail investors bought into the hype,' said Jackson Wong, vice
president of Tanrich Securities. Wong, like other market watchers,
expects companies listing later in the year to price their stocks
more reasonably as a result. 'Unless pricing has been at the
realistic end of the range or there is something distinctive about
the company, people are likely to be very cautious,' said Howard
Gorges, vice chairman at South China Securities. Recent results
compare unfavourably with the heady days before the collapse of US
investment bank Lehman Brothers last year. E-commerce firm
Alibaba.com's debut in November 2007 saw it surge 165 per cent. As
hopes for a recovery grew this year, there were some successful
debuts including Sinopharm Group and China All Access which as late
as September gained 15.8 per cent and 13. 1 per cent respectively.
And shares in China State Construction Engineering Group soared 60.3
per cent on their July debut in Shanghai, as investors jumped on what
was the world's largest stock offering in 16 months at the time.
Although optimism has faltered, companies with an established
reputation such as casino business Wynn Macau, which starts trading
Friday, are seen as stronger than some of the smaller, mainland
companies with IPO plans.
