CMOC, Citic Bank investors forecast to reap good gains
Stocks trade strongly in grey market
Investors in market newcomers China Molybdenum Co (CMOC) and China Citic Bank Corp are looking to reap considerable gains from the stocks' trading debuts, based on grey market prices.
CMOC shares rose as much as 55 per cent to HK$10.90 yesterday in the grey market, an off-exchange market that provides advanced trading. Based on that price, investors could get HK$4,100 for each board lot before transaction costs.
Citic Bank shares rose up to 19.5 per cent to HK$7 in the grey market, giving investors HK$1,140 for each lot.
However, securing even one board lot has not been easy for retail investors. Only one in five CMOC investors who ordered a board lot received any shares, while 30 per cent of Citic Bank retail subscribers of a single lot were allotted shares, sources said.
To be assured of one lot, retail investors must have subscribed to at least HK$87,900 worth of Citic Bank shares, compared with HK$170,000 for CMOC shares, the sources said.
Trading of CMOC shares will start today, followed by Citic Bank tomorrow.
'Institutional investors are willing to pay a high premium because of the low share allocation ratio,' said one fund manager.
CMOC priced its shares at HK$6.80 each, raising HK$7.34 billion from the offering.
Citic Bank priced its H shares at HK$5.86 and together with the A-share sale in Shanghai, it raised US$5.4 billion, the biggest flotation in the world this year.
The buying frenzy has prompted more companies to seek a listing, including Hong Kong-based Pacific Textiles Holdings, sources said.
The company, which sold a 10 per cent stake to Capital Group in 2004, planned to raise at least US$200 million by selling 358 million shares next month, they said.
Pacific Textiles reported a 34 per cent rise in operating profit to US$71 million for last year from US$53 million in 2005. It counts sportswear retailers such as Nike, Adidas and Liz Claiborne as customers.
The firm began meeting investors on Monday while the international roadshow would start on May 2, the sources said. Morgan Stanley and Citigroup are helping the share sale.
Meanwhile, Country Garden Holdings, whose shares have been trading in Hong Kong since last Friday, has exercised a greenshoe option to sell an additional 360 million new shares for HK$1.9 billion. The Guangdong-based developer raised HK$12.9 billion from its listing.
Get on board
CMOC investors stand to make HK$4,100 per lot based on grey market
Subscription amount to guarantee one lot of CMOC shares, in HK$ 170,000
