When Guangzhou-based Evergrande Real Estate Group's US$1 billion initial public offering (IPO) hits the Hong Kong market next month, it will inevitably bring into sharp focus other Chinese property developers with similar fund-raising plans in the city.
Evergrande's IPO is clouded by a host of issues, including an inexplicable change in its listing arranger and a drastic scale-down in the amount that it wants to raise now from its aborted fund-raising bid in March last year.
Analysts say many investors worry if vexing issues surrounding Evergrande's IPO will have any bearing on upcoming property shares sales here of other mainland real estate firms.
Adding fodder to market concerns are reports which suggest that Chinese authorities are poised to adopt an array of economic tightening measures. Beijing's move comes after it gave lenders significant leeway to pump more liquidity than originally anticipated into financial markets to blunt the impact of the global economic downturn.
Evergrande's latest bid to raise money in Hong Kong also comes amid general investor caution following a recent bull run in the global equity markets, according to analysts.
'It's difficult to say how Evergrande's IPO will turn out given the issues surrounding its fund-raising plans and volatility in the market,' says Howard Gorges, vice-chairman at South China Securities.
'Whether its IPO will have any bearing on other mainland property developers with similar fund-raising plans here is unclear. The market is watching Evergrande's IPO very closely. With the uncertainties that it faces, I don't think it is the best example of China property IPOs,' he adds.
