Hong Kong listings set to launch on better sentiment

Hanhua and Ozner listings are coming next month amid global signs of monetary easing

PUBLISHED : Saturday, 31 May, 2014, 12:59am
UPDATED : Saturday, 31 May, 2014, 4:25am

Listing hopefuls in Hong Kong are poised to expedite their long-planned share sales starting from next month, after investors' mood turned modestly brighter amid an expected monetary easing by the world's central banks.

Hanhua Financial, a mainland microcredit lender that specialises in making small loans to small and medium-sized firms in the municipality of Chongqing and Sichuan province, is scheduled to launch its trimmed US$260 million share offering, down from an original plan of US$367 million.

The firm will relaunch the deal on Tuesday, even though people working on the deal say there will be no commitments from anchors or cornerstone investors, who usually place sizeable orders in exchange for a guaranteed amount of shares.

Valuation of the Hanhua shares was subsequently lowered to a more reasonable level. Its 2014 price-book ratio was scaled down to about 0.8 to 1, compared with its earlier guidance of up to 1.1 times its asset value. It plans to sell 1.1 billion new shares, compared with its previous plan to sell 988 million shares.

According to the tentative listing schedule, pricing of the shares is due on June 13, and the flotation for June 19.

Meanwhile, Ozner Water, a Shanghai-based maker of water purification devices, is looking to take orders from retail investors next Thursday, with a plan to raise HK$1 billion.

In emerging markets, valuations tended to be inexpensive because investors had priced in issues like a steep slowdown in China's growth, wrote Virginie Maisonneuve, deputy chief investment officer at Pimco, in a research note. She said underweight investors should considering adding emerging-market stocks to their positions.

Despite lukewarm market conditions, the amount of capital raised in Hong Kong's listing market jumped 73 per cent year on year to about US$8 billion in the first five months, thanks to Li Ka-shing's US$3.1 billion listing of Hongkong Electric, according to Dealogic.

The listings are taking place while China warily tries additional stimulus measures and the European Central Bank signals it will loosen monetary policy to tackle stubbornly low inflation in the euro zone.

The International Monetary Fund said the Bank of Japan's aggressive easing may also need to be maintained for a prolonged period.

The city's stock market has rebounded gradually after undergoing a hiccup, as some investors took profits from Macau gaming and technology stocks.

US asset manager Waddell & Reed raised US$1.4 billion by selling its stake in Sands China, making it one of the most notable sales of the past week.