RCG extends gain to 248pc amid keen trade
RCG Holdings shares soared as much as 206.44 per cent yesterday as investors scrambled to outbid one another for access to the limited pool of shares in the newly listed company.
Interest in the provider of anti-counterfeit and biometric products has snowballed since normally reclusive billionaire Tony Chan Chun-chuen made a public appearance on Tuesday to mark the company's trading debut.
Reportedly a part-owner of RCG, Mr Chan has been in the headlines since laying claim to the rumoured HK$100 billion estate of the late Nina Wang Kung Yu-sum.
RCG eventually closed up 134.93 per cent at HK$23. It outpaced all other stocks by at least three times, stretching its gain to 247.96 per cent from 48.11 per cent during its debut.
The benchmark Hang Seng Index slid 341.43 points or 2.46 per cent to 13,539.21 yesterday, snapping a five-day winning streak.
But just under HK$40 million worth of shares changed hands during the two-day advance because RCG did not introduce any new shares during its listing on Tuesday.
'There is a shortage of shares and with only so many going around if somebody starts to buy, the supply dries up,' said Fulbright Securities general manager Francis Lun Sheung-nim. 'That's why you have this unnatural rise to almost HK$30.'
Market watchers said RCG could face strong selling pressure in the near term as shareholders might unload their holdings to take profit. 'If one speculator wants to get out, then everybody will because if you look at the buy queues, there are very few,' Mr Lun said.
But investors have been eager to jump on the bandwagon so far. After boosting profit in 2007 by 66.44 per cent to HK$719 million, RCG managed to increase its first-half profit by an even larger margin last year.
The firm is also positioned in the emerging information technology field of data security, which could be another draw card.
'It's a young industry and should have a bright outlook with wider applications,' said BOC International analyst Frank He. 'If they can specialise in this area, they can gain traction and deliver high stable growth going forward.'
RCG has been listed in London since 2004, and its shares have almost doubled in value so far this year. The stock surged 47.02 per cent in the first two days of this week as interest picked up because of the Hong Kong listing.
RCG listed in Hong Kong by way of introduction, meaning it did not offer any new shares to investors. While this form of listing will not raise any money, it can boost a company's share price by raising its public profile.
Since no new stock is being issued, investors are usually willing to pay more to buy a stake in the firm.
'It gives the stock some technical reason to advance,' said First Shanghai Securities strategist Linus Yip. 'So maybe [a company can] try to raise its share price and attract some public investors.'