Great Eagle Holdings

Langham shares drop 9pc on debut

Hotel-focused business trust hit by sell-off in Japan and shunned by retail investors

PUBLISHED : Friday, 31 May, 2013, 12:00am
UPDATED : Friday, 31 May, 2013, 4:41am

Shares in Langham Hospitality Investments, the hotel-focused business trust being spun off from Great Eagle, fell more than 9 per cent yesterday, making it the second-worst debut in Hong Kong this year.

The trust, which operates three luxury hotels in Kowloon, started trading in a gloomy market weighed down by another heavy sell-off in Japan. The Nikkei 225 Index dropped 5.2 per cent as a strengthening yen triggered heavy profit-taking. The Hang Seng Index fell 0.31 per cent.

The yen gained 0.17 per cent to 101.38 per dollar yesterday.

Langham's shares fell up to 10.4 per cent at one point before finishing down 9.2 per cent for the day at HK$4.54.

Other high-yield securities were also hit, with Link REIT, the biggest local property trust by market cap, sinking 4.1 per cent to HK$39.7, Yuexiu Real Estate Investment Trust falling 5.3 per cent to HK$4.44, and Champion REIT down 3.1 per cent to HK$3.8.

PanAsialum, a big manufacturer of aluminium casings for Apple's iPad, has had the worst debut in Hong Kong this year, falling 13.1 per cent, according to the data provider Dealogic.

Langham's shares had been priced at the middle of the indicative range at HK$5 per unit, offering an implied yield of 6 per cent this year and 6.4 per cent for next year.

Although the stock was well received by intuitional investors, retail investors were reluctant to take a sizeable position.

The offering coincided with those of well-known state-owned enterprises such as China Galaxy Securities and Sinopec Engineering.

Eugene Law, a director at Galaxy Securities International, said yesterday's falls in Hong Kong were mainly driven by the slide in Japanese equities after they reached a 51/2-year peak last week.

"Investors are exiting their positions after the 10-year US treasury shot up to a 13-month high of 2.23 per cent on Wednesday, prompting broader market caution on equities," said Law, who said he expected greater market volatility in the near future, with market sentiment turning defensive.

Conventional "safe-haven" stocks CLP, Power Assets and China Gas were the largest losers among the blue chips, each falling more than 3 per cent.