Changjiang cuts float by two-thirds after share price plunge

Changjiang Securities has been forced to scale back its secondary stock offering by two-thirds after receiving a cold shoulder from investors, the first brokerage to suffer such a setback in the mainland market.

The Shenzhen-listed brokerage said yesterday it slashed the volume of additional shares offered to the public from an original 600 million to 200 million. It is likely to raise 2.53 billion yuan (HK$3 billion), compared with its targeted 7.6 billion yuan.

Changjiang, based in Hubei province, had planned to float 600 million shares at 12.67 yuan apiece last Friday, but its share price plunged 8.5 per cent on Thursday. At 12.67 yuan per share, the price represented a 3.4 per cent discount on the closing price of 13.11 yuan on Wednesday.

After the share crash, public investors subscribed to only 90 million shares, accounting for 15 per cent of the total volume it expected to sell. Its underwriter, Orient Securities, will buy 110 million shares in the refinancing, Changjiang said.

'Changjiang and its underwriter must have had a miscommunication,' Dazhong Insurance fund manager Wu Kan said.

'The unsuccessful fund-raising activity is an embarrassment for the mainland's securities sector.'

Mainland brokerage share sales have been well received in the past by investors, who expect them to generate high returns amid rapid growth of the country's capital markets.