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Ping An Insurance

Ping An, Shenzhen lender extend losses

PUBLISHED : Wednesday, 05 March, 2008, 12:00am
UPDATED : Wednesday, 05 March, 2008, 12:00am

Ping An Insurance (Group) and Shenzhen Development Bank fell for a second day on concern that more of their shares will become available in the market.

Ping An, the country's second-largest insurer, dropped 4.68 per cent to HK$56 yesterday in Hong Kong after losing 3.37 per cent on Monday.

Its Shanghai-traded A shares fell 4.9 per cent to close at 67.10 yuan (HK$73.61) after an additional 3.12 billion A shares became available after a lock-up period.

Shenzhen Development Bank shares slumped 9.85 per cent to 29.75 yuan on a Shanghai Securities News report that the mid-sized lender plans to sell an additional 120 million shares to steel giant Baosteel at 35.15 yuan each for 4.22 billion yuan.

More Ping An shares will be available in the market, if the insurer's shareholders meeting in Shenzhen today vote for a proposal to sell up to 1.2 billion new A shares and 41.2 billion yuan of convertible bonds.

The company has been under pressure from regulators to scale down and postpone the share sale amid depressed market sentiment.

China Securities Regulatory Commission has not granted approval to Ping An's plan. 'Even if shareholders approve the deal, it will just be a preliminary stage and Ping An still has to get the nod of the securities watchdog,' Lewis Wan, chief investment officer of Pride Investment Group, said.

Property tycoon Lee Shau-kee, whose younger brother Li Zhaonan holds 200 million A shares in Ping An, said yesterday he would not reject the company's offering. Mr Li had previously acknowledged that the money for Ping An shares came from Mr Lee.

'The company needs capital to expand in the rural insurance market,' said Mr Lee. 'As the funds will be raised in two parts, it should be no problem [to the stock market].'

Ping An would be allowed to launch the share sale anytime within one year of the shareholders' approval. At yesterday's A-share price, the insurer is expected to raise about 121.7 billion yuan, down from 159.1 billion yuan on January 18 when the fund-raising plans were announced.

Separately, analysts dismissed the share placement speculation on Shenzhen Development Bank, saying the lender was likely to use other channels for refinancing.

'Debt financing seems to be a more suitable choice for the bank,' said JP Morgan analyst Samuel Chen.