Forms and funds run out as punters rush for China Molybdenum

The rush of punters to place orders for shares of China Molybdenum left some banks running out of subscription forms and some brokerages drained of funds when the firm's initial public offering opened yesterday.

Sources close to the sponsor of the mainland's largest producer of the steel hardener stressed that there were enough forms to go around.

Four major securities brokerages received about HK$13 billion in margin orders for China Molybdenum, or about 18 times the amount of shares available in the retail tranche, despite a rise in the borrowing rate to about 6 per cent as more than HK$310 billion of funds are still frozen for the subscription for Country Garden Holdings.

Kingston Lin King-ham, an associate director at Prudential Securities, which got HK$2 billion of margin orders for China Molybdenum, expects the retail tranche to be 200 times oversubscribed.

'Investors are betting China Molybdenum may copy Hunan Nonferrous Metals, a similar stock that gained 73 per cent on its trading debut in March last year,' said Charis Wong Ho-ching, an analyst at Phillip Securities, which exhausted its funding after granting HK$1 billion in margin loans.

Banks were offering interest rates lower than 5 per cent for subscriptions.

China Molybdenum aims to raise up to HK$7.3 billion by selling 1.08 billion new H shares at HK$5 to HK$6.80 each.