NewCinda soars but fellow debutants count losses

China Cinda Asset Management made a stunning debut on the Hong Kong stock exchange yesterday, defying the cautious mood in the market that contributed to a poor start for two other mainland companies on the day.

Shares in the state-owned distressed asset manager surged as high as 33.8 per cent before closing at HK$4.50, 25.7 per cent above the offer price.

The benchmark Hang Seng Index fell 0.51 per cent, before the US Federal Reserve's monetary policy meeting next Wednesday that might provide clues on when the central bank could start tapering its US$85 billion monthly bond-buying programme.

Cinda's performance would boost sentiment at a time investors are taking profits by selling blue-chip mainland banking and insurance stocks after the People's Bank of China refrained from injecting funds into the system by suspending its bi-weekly open market operations, the first time it has done so since the end of October.

Apart from the uncertainty over tapering, the escalating Sino-Japanese tensions over the Diaoyu islands have also prompted investors to cash out before the end of the year.

"The rising need for banks to dispose of their non-performing loans off their balance sheets is a key growth driver for Cinda," Nomura analysts said in a research note.

"With the US QE (quantitative easing) tapering as the backdrop, we believe Chinese banks' liquidity is likely to remain at relatively tight levels over the next three to five years."