The ****trait of a Cru****ngly Fearful "Olympic Host" -- Weak start for
CRC fuels China fears
Financial Times FT.com
ASIA-PACIFIC
China
Weak start for CRC fuels China fears
By Geoff Dyer in Shanghai and Justine Lau in Hong Kong
Published: March 10 2008 19:09 | Last updated: March 10 2008 19:09
China Railway Construction had a weaker-than-expected debut in Shanghai
on Monday, stoking concern about the sustainability of China¡¯s market
boom and raising fears that new share offerings might struggle to find
buyers.
Shares in the group rose 28 per cent in their first day of trading ¨C a
good result in most markets, but well below what had been expected by
analysts.
Meanwhile, China Pacific, the country¡¯s third-largest insurer, delayed
again its plans to raise about US$3.8bn in Hong Kong due to tepid
investor response amid falling stock prices.
China Railway Construction began trading in a weak overall market, with
the Shanghai composite index falling 3.6 per cent to a seven-month low,
which led some analysts to say the company¡¯s performance was
respectable. Shares in the group will begin trading in Hong Kong on
Thursday after it raised a combined US$5.4bn from the two markets,
making it the biggest IPO so far this year.
However, some analysts said that other planned share offerings in
mainland China were likely to suffer from weaker than expected demand.
¡°Psychologically, this will hurt both institutional and individual
investors¡¯ confidence,¡± said Peng Yunliang, senior analyst from Shanghai
Securities. ¡°When a new stock issue by a large state-owned company rises
by less than 30 per cent on its first day, that does not reflect well
for the market in the short term.¡±
China Pacific, which listed in Shanghai last December and has postponed
its Hong Kong listing once, in January, has pledged not to sell its H
shares cheaper than the A shares, which were sold at Rmb30 each. The
promise gives the company little flexibility in pricing the offering in
Hong Kong, where the benchmark Hang Seng Index has fallen 17.6 per cent
since the start of the year. The China Enterprises Index of Hong
Kong-listed mainland companies has decreased 21.6 per cent.
China Pacific last week began pre-marketing the Hong Kong listing but
decided to postpone it following poor reception, according to a person
familiar with the deal.
Credit Suisse, UBS and China International Capital Corp, which are
arranging the listing, declined to comment.
Copyright The Financial Times Limited 2008
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