Haitong Securities flat in HK debut after $1.7 billion listing

April 27
9:21 AM 2012

Shares of Haitong Securities Co Ltd <6837.HK>, China's second-biggest broker by assets, were little changed in its Hong Kong debut on Friday, as concerns over Europe's debt troubles dampened investor demand for new listings.

Bankers, investors and a growing list of companies looking to sell shares in Hong Kong, Asia's main destination for initial public offerings, have kept a close eye on Haitong's $1.7 billion deal, the biggest sale of new stock so far this year in Asia Pacific.

While Hong Kong has a robust IPO pipeline, Haitong's market performance will be crucial to kick-start a sluggish IPO market. Its tepid debut could indicate upcoming offerings by Graff Diamonds, Fosun Pharmaceutical and China Nonferrous Metal Mining Group will have a hard time convincing investors to buy into new listings.

"People are worried about Europe's debt crisis," said Jasper Chan, corporate finance officer at brokerage Phillip Securities in Hong Kong. "Perhaps there will be no rebound in offerings this year."

Asia-Pacific's equity capital markets have had their slowest start in about four years, Thomson Reuters data showed. Deal values have dropped 20 percent so far in 2012 from the same time last year. Even a 13 percent rise in the benchmark Hong Kong share index <.HSI> has failed to spark investor interest in new listings.

One exception was the listing of a rare type of company on the mainland on Friday. Co Ltd <603000.SS>, the online news portal of the Chinese government's mouthpiece, the People's Daily, surged in itsShanghai debut.

Haitong opened at HK$10.60, unchanged from its offering price last week. The stock traded at HK$10.54 by 0312 GMT.

The company, which is already listed in Shanghai <600837.SS>, will use the proceeds to fund overseas takeovers and expand margin finance, hedge fund and private equity businesses.

More than a third of Haitong's offering was backed by cornerstone investors, including U.S. hedge fund DE Shaw and Pan Asian private equity firm PAG, headed by former TPG dealmaker Weijian Shan.

Haitong's bigger rival Citic Securities <600030.SS> <6030.HK> braved last year's market turmoil and raised $1.7 billion through a Hong Kong listing and that stock has climbed 25 percent since the listing in early October.

This article is copyrighted by Reuters

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