SouthGobi Energy Resources suffered a double-digit loss yesterday, becoming the second multibillion-dollar initial public offering in three days to flounder on its trading debut as investors tighten their purse strings.
The Vancouver-based coal miner dived as much as 16.2 per cent in the morning before settling down 11.1 per cent at HK$112. It was the sixth-worst performing stock in the market.
The slide comes just after giant Russian aluminium producer Rusal dropped 10.6 per cent on its debut on Wednesday.
'Overall market sentiment is not very good so the performance of the IPOs in the first trading days [has been] very bad,' said Patrick Yiu Ho-yin, the managing director of CASH Asset Management. 'And [investors] now have more choices to buy cheaper valuation stocks, so it is not necessary to buy IPOs.'
Financial markets have been spooked by sudden monetary tightening on the mainland and aggressive talk from United States President Barack Obama about restricting revenue streams for major banks.
New stocks have been hit especially hard because their listing prices were set before the correction gained momentum.