Celestial Asia Securities Holdings (CASH) has defended its decision to cut the 1 per cent subscription fee for the Mass Transit Railway Corp's upcoming initial public offering, saying the tactic was not aimed at triggering fierce competition.
Deputy managing director Thomas Li yesterday said while the firm had cut the fee to 0.25 per cent of the amount subscribed from 1 per cent - the amount required by the listing rules - it could still make a profit on the business. He was responding to comments from some rival brokers that CASH would not be able to cover its costs.
To remain competitive, many brokers may be forced to follow suit and cut their rates to 0.25 per cent, the local minimum commission rate.
Mr Li did not rule out the possibility of offering more sweeteners to further entice clients.
Meanwhile, CASH head of research Herbert Lau Chung-kwan said that given their large discount to net asset value (NAV), MTRC shares could be seen as a good investment.
He said the shares' issue price - between HK$8 and HK$9.38 - represented only about 55 per cent of its NAV, cheaper than that of Singapore's subway operator, SMRT.