Shares in property trader Pearl Oriental Holdings surprised the market yesterday by soaring almost 18 per cent following a private placing to a US fund manager to raise $213.6 million.
The stock closed at $2.30 and was the most actively traded issue in the market yesterday by volume and turnover.
The heavy buying followed an announcement by Pearl that it had sold 120 million shares at $1.78 a share to Alliance Capital.
Investment bank Smith Barney (Hong Kong), which brokered the deal, suggested Alliance's stake was a vote of confidence in Pearl's impressive track record of profits growth - up from $262 million to $410 million last year.
'A blue-chip name is come in and said it might take a larger stake,' Smith Barney vice-president Brad Allen said.
Rival brokers said that on fundamentals the Pearl share was massively overvalued.
'Pearl is the one property company in Hong Kong that seems to have discovered a magic elixir, and Smith Barney is drinking at the trough,' the director of a Hong Kong brokerage said.
