Beijing IPO Campaign to Boost Markets Falls Flat 大宗IPO提振中国股市或成泡影

By newsdoug on September 29, 2011

Investor angst throws water on Beijing's IPO party Beijing is quickly discovering that it can throw a party by making mega-IPOs for some of its best companies in a bid to revive its moribund stock markets, but there’s no guarantee that anyone will come to join the fun. That appears to be the lesson as CITIC Securities (Shanghai: 600030) has been forced to pare back its plans for a Hong Kong IPO by more than 10 percent due to lackluster demand. (English article) The company, which offers one of the best windows for foreign investors into China’s promising financial sector, is now aiming to raise just $1.7 billion, compared with a previous target of $2 billion, after pricing the deal at the low end of its range. The reduced offering and final pricing, which give the company a modest price-to-earnings ratio of just 9 times 2011 earnings, are a bit surprising after reports said earlier this week that the deal was 4 times covered. Clearly either the company’s bankers were exaggerating to generate more enthusiasm, or investors got cold feet due to growing uncertainty about China’s financial sector, or most like a combination of the 2 was behind this disappointing result. CITIC Securities was to be the first of a steady stream of Chinese blue-chip firms to make new mega-listings in Hong Kong and Shanghai, in what I suspect was a carefully orchestrated effort by Beijing to revive those two markets — especially a Shanghai market now trading at its lowest levels in over a year. Other major firms that announced mega listing plans included Sany Heavy Industries (Shanghai: 600031), which was aiming to raise $3.3 billion in a Hong Kong listing; and Sinohydra Group, operator of the 3 Gorges Dam, and China Communications Construction, which were aiming to raise $2.6 billion and $3.1 billion, respectively, through listings in Shanghai. (previous post) Some of the companies were already talking about reducing or canceling their offerings due to weak market demand, and this disappointing showing for CITIC Securities will only cause more hesitation. If I had some extra money to spend, I would invest in some of these upcoming IPOs, as they will undoubtedly offer nice bargains for some of China’s top corporate names. That will be bad news for Beijing, which was hoping to get better returns for some if its top-notch players.

Bottom line: Investor angst will undermine Beijing’s plans to revive markets with IPOs for some of China’s top companies, providing bargain buying opportunities for bolder investors.

中国当局很快就发现：虽然能通过一些优质企业大规模招股为股市注入活力，但却不能保证有多少人愿意凑这场热闹。中信证券(600030.SS)在香港IPO，由于需求不旺而降低了筹资额。中信证券是外国投资者押注中国金融业的一个良机，原计划透过在港IPO筹资20亿美元，但最终以招股价指导区间低端定价，筹资额减为17亿美元。这有点令人意外，因本周稍早报导称，中信证券H股获得了四倍认购。这麽看来，要麽是承销商为吸引投资热情而夸大其词，要麽就是投资者面对中国金融业的不确定性望而却步，更大的可能是二者兼而有之。我猜测中信证券香港IPO可能是中国政府精心策划的，希望能藉此提振沪港股市，尤其是跌至逾一年低位的沪市。其他宣布了大宗上市计划的还有三一重工(600031.SS)、中国水电和中国交通建设等。三一重工计划在香港上市融资33亿美元；中国水电是三峡大坝建设方，计划在沪市融资26亿美元；中国交通建设则计划在沪市融资31亿美元。由于市场需求低迷，有些公司已经在考虑削减或取消上市计划，而此次中信证券的表现，肯定会令它们更加迟疑。不过，如果我手头有闲钱，我就会买这些即将上市的新股，因为肯定能够以较低的价格，买到这些中国顶级企业的股份。不过这样的局面，恐怕会令中国当局感到失望。

一句话：投资者不安情绪，不利于中国当局藉由大宗IPO提振股市的计划，不过对胆大的投资者来说，倒是不错的买入时机。