Engineering giant makes stellar debut on exchange
China Machinery Engineering shares surge, boosting a sagging HK market
Shares in China Machinery Engineering, a state-controlled engineering contractor in the power sector, rose sharply on its debut in Hong Kong yesterday, offering a surprise bonus for investors on a bleak day.
The Beijing-based company, which had priced its shares at the top end of the indicative range, jumped up to 19 per cent at one point before ending the day 16.7 per cent higher than its offer price of HK$5.40. The Hang Seng Index lost 0.8 per cent on the day.
The stellar performance reflected renewed buying interest in companies with attractive valuations as the market expects more hot money to flow into the city, said two bankers familiar with the deal who did not want to be identified.
China Machinery's US$498 million share offering was one of biggest deals in Hong Kong this year, after mainland insurer PICC Group's US$3.55 billion listing, which was the city's largest initial public offering (IPO) in two years.
One of the bankers said the company's state-owned status is a source of confidence for long-only institutional investors, who were the most active buyers yesterday.
Institutional investors are also keen to build up a sizeable stake in the company that provides significant exposure to developing markets, where earnings and sales are expected to grow rapidly.
Yang Wansheng, chairman of China Machinery, said: "With 30 years of overseas experience, the company will continue to expand abroad and has no plans to get into the China market."
