Chongqing Iron shares leap 143pc on debut
Shares of Chongqing Iron & Steel jumped 143 per cent on their Shanghai debut yesterday due to increasingly optimistic views on steel prices and as the mainland stock market recovered from the biggest one-day fall in a decade.
The A shares closed at seven yuan yesterday, 4.12 yuan higher than their 2.88 yuan offer price. The company's Hong Kong-traded H shares closed down 1.7 per cent at HK$2.89.
The Shanghai-Shenzhen 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose 3.5 per cent after sliding 9.2 per cent on Tuesday.
Chongqing Iron's A shares closed at a 145 per cent premium over the H shares, the sixth-biggest such premium among Hong Kong-mainland dual-listed companies.
'Mainland investors like to buy initial public offerings, which always push up share prices on their trading debut,' said Liang Yufeng, the head of research at Orient Securities.
The gap between A shares and H shares would narrow as the mainland stock market becomes more mature, he said.
The share prices of most mainland steelmakers have more than doubled on average in the past year amid optimism on steel prices.
Average steel prices in January in China increased 4.6 per cent month on month to 3,867 yuan per tonne, according to the China Logistic Information Centre.
Baoshan Iron and Steel, the mainland's No1 steelmaker, said yesterday it would raise key steel product prices by 5 per cent to 7 per cent in the second quarter after South Korean steel giants Hyundai Steel, Posco and BNG indicated they would raise prices by more than 6 per cent this month.
The price of hot-rolled sheets will increase 200 yuan a tonne from 3,742 yuan in the first quarter while cold-rolled sheets will rise 300 yuan a tonne from 4,596 yuan, Baosteel said. The increase was in line with market expectations.
'Taking into account the downside risks, like removal of export VAT rebates, anti-dumping and global economic slowdown, we are of the view that steel prices may still have lots of rising momentum,'' said Helen Lau, an analyst at Daiwa Institute of Research.
Shares in Baosteel rose 4.9 per cent closing at 9.47 yuan yesterday.
