Rusal rallies but is worst new listing after a month
Shares in Russian aluminium giant Rusal recovered slightly from the battering they have taken in recent weeks with a bounce of 6.9 per cent yesterday.
The stock closed last week at HK$7.50, down 30.6 per cent from its offer price of HK$10.80 which it has not touched since it started trading on January 27.
The stock opened yesterday at HK$7.80 and by mid-morning rose to a high of HK$8.34 before falling back gradually for the rest of the day to close at HK$8.02
'I don't think the mid-morning spike was significant - the trading volume was very thin. It was more likely to have been a case of poor trading by somebody,' said Andrew Sullivan, a trader at MainFirst Securities.
Trading volume, at HK$80.22 million, was very thin for a stock with a market capitalisation of HK$11.35 billion, although just over a week ago a mere HK$43.5 million worth of shares changed hands.
Retail investors have been discouraged from getting involved in Rusal by the Securities and Futures Commission and this is likely to have affected liquidity in the stock.
Rusal's performance in its first month of trading has been the worst by a new listing for many months. The previous worst newcomer after one month's trading was mainland developer Glorious Property Holdings, which dropped 22.5 per cent, according to Dealogic.
Stock market sentiment has been hurt by Beijing's decision to restrict bank lending, but the Hang Seng Index is now 1.7 per cent higher than it was on January 27. Rusal is 25.7 per cent below its listing price.
One of the attractions of Rusal for investors is that it is the biggest aluminium company in the world with most of its earnings from aluminium operations. Other big aluminium companies such as Alcoa have earnings from other mining operations.
But aluminium has been hit hard along with other commodities over the past month, which has also helped weaken sentiment towards Rusal.
The price of three-month aluminium on the London Metal Exchange peaked on January 6 at US$2,377 per tonne, before falling 16.7 per cent to US$1,980 on February 5. It has since risen 8 per cent to US$2,139.
Sentiment towards Rusal may also have improved yesterday following a company statement that it will increase output this year, having seen 'the first signs of a recovery' after the global economic crisis.
Despite having a market cap of HK$11.35 billion, Rusal is thinly traded
Yesterday's rise in Rusal's shares after they dropped to HK$7.50 last week: 6.9%
Despite the gain, the stock is still trading below its listing price by: 25.7%