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Sunday, 18 October 2009
Investors picky after new offerings sag
Investors have become increasingly selective about new share sales in Hong Kong after some weak trading debuts by large initial public offerings, analysts say.
Investors have become increasingly selective about new share sales in Hong Kong after some weak trading debuts by large initial public offerings, analysts say.
Mingfa Group, a mainland property developer that planned to raise as much as US$1 billion, has delayed the launch of its Hong Kong IPO.
The Fujian -based company delayed its roadshow - originally scheduled to begin last Friday - because the company’s valuation expectations did not match those of investors, according to IFR Asia, a Thomson Reuters service.
Ricky Tam Siu-hing, chairman of the Hong Kong Institute of Investors, said investors were more realistic.
New shares have performed variably recently. Metallurgical Corporation of China, which builds industrial plants, China Lilang, Peak Sport Products, China South City Holdings and Glorious Property Holdings all fell below their offer prices on their recent trading debuts. Metallurgical Corp dropped 11.7 per cent on September 24 and Glorious Property fell 14.6 per cent on its first trading day early this month.
But Shenguan Holdings (Group), a mainland sausage-casing maker, made a strong trading debut last week, jumping 39.7 per cent above its offer price, while casino operator Wynn Macau also saw its shares rise on first-day trade.
Tam said the attractiveness to investors of any given IPO depended on how “unique” the company was.
“There are a string of real estate companies seeking to float shares,” he said, adding that “investors have many choices” in this sector.
Mainland developers Evergrande Real Estate, Fantasia, Longfor Properties, SCE Property and Sunac China are preparing listings.
VC Brokerage director Louis Tse Ming-kwong said recent market sentiment was not too bad amid a continuous inflow of cash, but indices were quite high.
Tse agreed that whether new share sales would be successful depended on the individual company and the sectors with which it was engaged.
Whether or a not a share price was reasonable was another factor.
Pricing will be a concern after weak trading debuts by large offerings such as Metallurgical Corp and China Resources Cement Holdings, both of which set their offer prices at the top end of the range.
However, Powerlong Real Estate Holdings reduced the size of its initial offering by 45 per cent to HK$2.75 billion from HK$5 billion before its debut.
Kenny Tang Sing-hing, head of research at Redford Securities, expected investors would be cautious about new share sales, particularly those linked to the real estate sector, even though there had been some improvement on trading debut for some companies.
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Investors picky after new offerings sag
Maria Chan
18 October 2009
Investors have become increasingly selective about new share sales in Hong Kong after some weak trading debuts by large initial public offerings, analysts say.
Mingfa Group, a mainland property developer that planned to raise as much as US$1 billion, has delayed the launch of its Hong Kong IPO.
The Fujian -based company delayed its roadshow - originally scheduled to begin last Friday - because the company’s valuation expectations did not match those of investors, according to IFR Asia, a Thomson Reuters service.
Ricky Tam Siu-hing, chairman of the Hong Kong Institute of Investors, said investors were more realistic.
New shares have performed variably recently. Metallurgical Corporation of China, which builds industrial plants, China Lilang, Peak Sport Products, China South City Holdings and Glorious Property Holdings all fell below their offer prices on their recent trading debuts. Metallurgical Corp dropped 11.7 per cent on September 24 and Glorious Property fell 14.6 per cent on its first trading day early this month.
But Shenguan Holdings (Group), a mainland sausage-casing maker, made a strong trading debut last week, jumping 39.7 per cent above its offer price, while casino operator Wynn Macau also saw its shares rise on first-day trade.
Tam said the attractiveness to investors of any given IPO depended on how “unique” the company was.
“There are a string of real estate companies seeking to float shares,” he said, adding that “investors have many choices” in this sector.
Mainland developers Evergrande Real Estate, Fantasia, Longfor Properties, SCE Property and Sunac China are preparing listings.
VC Brokerage director Louis Tse Ming-kwong said recent market sentiment was not too bad amid a continuous inflow of cash, but indices were quite high.
Tse agreed that whether new share sales would be successful depended on the individual company and the sectors with which it was engaged.
Whether or a not a share price was reasonable was another factor.
Pricing will be a concern after weak trading debuts by large offerings such as Metallurgical Corp and China Resources Cement Holdings, both of which set their offer prices at the top end of the range.
However, Powerlong Real Estate Holdings reduced the size of its initial offering by 45 per cent to HK$2.75 billion from HK$5 billion before its debut.
Kenny Tang Sing-hing, head of research at Redford Securities, expected investors would be cautious about new share sales, particularly those linked to the real estate sector, even though there had been some improvement on trading debut for some companies.
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