Hang Seng Index

Volatile debut seen for Prada

PUBLISHED : Thursday, 23 June, 2011, 12:00am
UPDATED : Thursday, 23 June, 2011, 12:00am


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Investors are bracing themselves for a volatile stock market debut of Prada - Hong Kong's second biggest float of the year - on Friday.

Investor confidence has been battered by the weak outlook of the equity market and the poor performance of recent new floats.

Yesterday the Hang Seng Index gained just 9.38 points, or 0.04 per cent, closing at 21,859.97; the stock market has been in a consistent slump since the beginning of this month. The Hong Kong benchmark had fallen 7.13 per cent since May before this week's sluggish recovery.

'The index will have some support in the short term,' said Mark To, head of research at Wing Fung Financial Group. 'The performance of new listings tends to be highly correlated with the overall stock market.'

Prada, majority-owned by Miuccia Prada and her family, had to lower expectations for its valuation, which was considered rich by some investors. The offering has been priced at HK$39.50 a share, the low end of its initial range of HK$36.50 to HK$48.

Some 10 per cent of all the shares were offered to retail investors.

Prada, which raised a total of HK$16.72 billion in net proceeds for expansion and debt payment, is the second-largest IPO in Hong Kong after global commodity trading giant Glencore International's US$10 billion IPO, data from Dealogic show.