CRCC short of steam on trading debut
China Railway Construction Corp, the nation's second-largest railway builder, posted weaker than expected gains in its trading debut yesterday as it was caught up in the market malaise.
CRCC jumped 12.15 per cent from its issue price of HK$10.70 to close at HK$12, sliding back from the day's peak of HK$12.66. About HK$14.32 billion worth of shares changed hands.
Investors with a board lot of 500 shares would have gained HK$650 if they sold at the closing price.
The first-day performance was worse than its pre-trading session when it gained 18 per cent in the so-called grey market on Wednesday.
'Some traditional funds have shied away from new offerings because of poor market sentiment,' said SG Asset Management (Hong Kong) managing director Winson Fong. 'The market condition is out of control. Investors will find it difficult to make quick gains from new offerings.'
Market watchers also blamed the weak performance on the fact that short selling of CRCC shares was allowed from yesterday, the same day as the stock's debut. Short selling is the practice of selling securities the seller does not own in the hope of buying them back later at a lower price.
Investors are pessimistic about new offerings after the disappointing performance of CRCC, a far cry from the enthusiasm that greeted new listings last year.