LI, Tao @ Hong Kong

A trader reads a printout at the Stock Exchange in Hong Kong on Friday. Market analysts said the disappointing debut of mainland textiles maker International Taifeng Holdings Friday was not really surprising. MIKE CLARKE / AFP

Investors not excited about upcoming initial offerings, including mainland banking giant ABC’s

Hong Kong’s IPO market is cooling down amid a lackluster broad market, with a 19 percent plunge in International Taifeng’s share price on its trading debut Friday further weighing on sentiment for newly-listed shares.

International Taifeng Holdings Ltd, a cotton yarns and bedding products manufacturer, closed its first trading day at HK$1.67, down HK$0.39, or 18.9 percent, from its offer price of HK$2.06 per share.

“It was even beyond my estimated 10 percent fall,” said Alvin Chung from Prudential Brokerage. “The market is quite lukewarm towards new stocks currently, as the current low level of existing stocks has provided investors many other choices.” Share prices have fallen significantly this year on worries about tightening on the mainland as well as over the European debt crisis.

Linus Yip at First Shanghai Securities also called Taifeng’s slump in its debut as “predictable”, saying that “textile stocks do not belong to any hot theme in the market when investors are dazzled by other, better choices.”

Though the benchmark Hang Seng Index advanced 1.2 percent to 19,872.38 Friday, the gauge has fallen by 14 percent from its peak last November.

After recent corrections in prices, many existing stocks are now trading at competitive prices compared with these newly listed ones, Chung said, adding that investors now may prefer those they are familiar with over these new “risky” ones.

Xinjiang Goldwind Science & Technology Co, the world’s fifth-largest wind turbine maker by capacity, which is due to list in Hong Kong on June 22, also failed to draw strong response from investors.

Reports on Friday said the Shenzhen-listed company will lower the low end of its indicative price range by about 9 percent to HK$18.1 from HK$19.8, as buy orders from public investors failed to reach the “target”.

“Though low-carbon economy is the focus of the government, it is not the focus of the market right now,” said First Shanghai’s Yip. “The stock is priced too high, which also made it less attractive to investors.”

Not expecting an outstanding performance of the stock at the trading debut, Yip nevertheless believes Goldwind should be a good choice in the long run. As a big player in the sector, it is likely to benefit more from the Central Government’s great efforts in tapping offshore wind energy, Yip suggested.

Prudential’s Chung expects the initial public offering of Agricultural Bank of China (ABC), probably the largest initial public offering this year, will sweep away the gloom of the new-issues market.

The nation’s biggest lender reportedly plans to sell 22.235 billion shares in Shanghai and 25.411 billion shares in Hong Kong. Chung said experience suggests that a huge IPO is very likely to liven up the whole IPO market for a while.

“But investors should take note of ABC’s relatively high indicative price range, as other mainland banks are currently trading at low price levels after recent corrections,” said Yip.

Yip nevertheless also believes ABC’s listing will prove to be a hit, as the stronger performance of mainland lenders in Hong Kong compared with their performance in Shanghai indicates the confidence of foreign investors in State-owned banks.

China Daily

(HK Edition 06/12/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-06/12/content_9968526.htm