The market for initial public offerings has split in two as large companies still roar along while small to mid-sized share sales are losing steam.
Shares of China Railway Group, the world's third-biggest construction contractor, could jump as much as 20 per cent when they begin trading in Hong Kong today but might suffer from weak market sentiment, fund managers said.
China Railway shares in so-called grey market trading rose as high as HK$7.06, or 16.6 per cent over their offer price yesterday.
The company fixed the price of its H-share offering at the high end of HK$5.78 after marketing the deal at between HK$5.03 and HK$5.78.
The company sold 3.326 billion H shares. The retail tranche of the offering was more than 208 times subscribed while institutional investors placed in excess of US$60 billion in orders.
'Sentiment towards initial offerings is not as strong as before, but I see China Railway rising further than the grey-market price because it's a large-cap stock that many institutional players would be interested in,' said Alex Wong, a fund manager at Ample Capital.
