HONG KONG’S benchmark Hang Seng may be enduring a prolonged period of pessimism, but that hasn’t stopped firms looking to raise capital from considering the SAR’s bourse.
Next month, 11 firms are looking to raise nearly 77 bln hkd, including former SGX-listco Hongguo International.
Nanjing-based ladies footwear giant Hongguo International is tentatively scheduled to raise around 2.34 bln yuan on September 12.
Hongguo was listed in Singapore in 2003, only to delist in May of last year, with management citing at the time a desire for “greater flexibility.”
Just prior to its delisting, Hongguo pointed to low daily trading volume, averaging just over one million shares – equivalent to only around 0.26% of all the shares -- as another reason for delisting.
As of January 13, 2010, the last trading day for Hongguo in Singapore, the firm’s market capitalization was 127 mln sgd based on a closing price of 0.320 sgd.
A Chinese language piece in Sinafinance cited market watchers as saying that the recent fluctuations on the bourse are as unpredictable as the weather, with no clear stormclouds or sunbursts on the horizon to tip off investors – or commuters – as to whether to buy, hold, or sell (or perhaps bring an umbrella to work).
But this hasn’t stopped the 11 intrepid firms from braving the elements and looking to Hong Kong to bring in a collective king’s ransom in capital raising expeditions.
And perhaps most telling about this phenomenon is the fact that over half of these candidates are reliant upon domestic demand in Mainland China to propel their current and future growth stories.
With the PRC recently overtaking Japan as the world’s second largest economy and Beijing’s ongoing attempts to wean the country’s GDP from over-reliance on exports, it is little wonder that some of the most promising forecasts are coming from companies with exposure to Mainland China’s 1.3 billion consumers.
Among them is China Everbright Bank (SHA: 601818), which raised 3.3 bln usd in Shanghai last year.
The mid-sized Beijing-based lender plans to raise up to 46.8 bln yuan next month, but analysts say this may be a bit overenthusiastic.
Regardless, it would be the biggest IPO this year in Asia if China Everbright can even come close to achieving its target, and would be the last of Mainland China’s major lenders to go public in Hong Kong.
In fact, market watchers say they are closely watching the outcome of the China Everbright Bank capital raising campaign in Hong Kong, and see it as an important litmus test for how the market will react to the rest of the IPO candidates next month.
Two firms are testing the waters in Hong Kong with pre-market inquiry activities this week.
Mainland China’s largest tea merchant Ten Fu is seeking to raise 2.34 bln yuan, while CITIC Securities (SHA: 600030) is planning a mega Hong Kong listing of its own.
However, the two are still awaiting approval from Hong Kong bourse authorities, with analysts saying the final decisions will also be very important in determining how successful overall the latest scheduled spate of IPOs in Hong Kong will ultimately be.
Two firms planning to squeeze in an August listing will likely have to reschedule for September.
Gelatin candy and snack food maker Crayon Shin Chan will likely see its IPO postponed to next week.
Meanwhile, truck and earthmoving equipment giant Sany Heavy Industries Co Ltd (SHA: 600031) has also opted to postpone its Hong Kong listing to next month, citing “unstable market conditions.”
The Hunan Province-based firm recently obtained approval from the PRC’s bourse watchdog – the China Securities Regulatory Commission (CSRC) – to issue as many as 1.54 bln shares in Hong Kong.
Media reports have said Sany plans to seek approval from the Hong Kong bourse on September 1 for its proposed 3 bln usd listing.
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