Hong Kong-listed mainland developer CIFI Holdings sank almost 11 per cent on Tuesday morning to finish midday at HK$2.23 after it announced a HK$1.32 billion share placement before trading began in the market.
“Again, investors reacted negatively to the mainland developers’ share placement. In most case, their shares price would fall as a result of that news,” said Ivan Li, equity strategist at Tung Shing Securities. “These companies usually do not raise funds for profitable projects but maybe for repaying debts.”
The developer was the most traded stock on Tuesday morning with turnover at HK$1.46 billion.
CIFI had announced on the stock exchange website early on Tuesday morning a share placement of 600 million new shares at HK$2.2 each to raise a total of HK$1.32 billion for general working capital. This represents a 12 per cent discount to its close on Friday at HK$2.5.
The company suspended trading on Monday and resumed trading on Tuesday. Investors sold down its shares to an intra-day low at HK$2.18, below the placement level and the lowest since April 23. The share price of CIFI is still up 41 per cent year-to-date though.
CIFI on Friday has signed an agreement with Hongkong Land Holdings to jointly develop a mixed-use property project in Shanghai’s Pudong district for a total investment cost of 7.3 billion yuan (HK$9.3 billion).