Tight liquidity and a big investor appetite have prompted brokerages to close the margin financing books earlier than scheduled on China Railway Group's share offering, deemed to be the most popular of the year.
Brokers also said they were unable to secure funding from banks to lend to their clients despite heavy demand for margin financing.
'We received orders worth HK$14.5 billion for margin financing yesterday but we could accept applications for only HK$5.5 billion in the end,' a Sun Hung Kai Financial broker said.
'Due to the tight funding situation, we have to stop the margin financing and we are still negotiating with banks for more funding.'
Major retail brokerages such as KGI (Asia), Sun Hung Kai Securities, Bright Smart Securities and Taifook Securities received about HK$21.5 billion worth of margin orders for the railway builder's offering, far exceeding the HK$1.92 billion worth of shares available in the retail tranche.
'Market demand has been so strong that banks couldn't fix the interest rate for such borrowings for a while,' said Cherrie Yan Cheuk-yi, a corporate finance officer at Phillip Securities. 'As such we will not be able to fix our margin financing rate until next Monday.'