October 6, 2011 / 1:55 AM / in 6 years

UPDATE 1-China's Citic Securities dips after $1.7bln HK debut

(Adds details, background)

By Elzio Barreto

HONG KONG, Oct 6 (Reuters) - Citic Securities Co Ltd, China’s largest listed brokerage, fell as much as 4.5 percent before recovering on its Hong Kong stock market debut on Thursday, after raising a less-than-expected $1.7 billion in its first listing outside the mainland.

Citic Securities is among the few companies to successfully launch a stock offering in Hong Kong during the past months, with a long list of deals pulled or postponed due to the volatile markets.

In early morning trade, Citic Securities shares were trading at HK$12.96 compared with the offer price of HK$13.30 each and recovering from the day’s low of HK$12.70. The company sold shares at the bottom of a revised price range of HK$13.30-$15.20 a share last week.

While the shares held close to the offer price, they traded far below the broader market. The benchmark Hong Kong stock exchange index was up 4.4 percent in early trade.

Citic Securities , already listed on Shanghai’s stock exchange, is part of China’s state-backed conglomerate Citic Group which was formed in 1979 as China’s first financial group.

The Hong Kong listing comes at a time when global stock markets have plunged on concerns about European debt crisis, among other factors. The benchmark Hang Seng index tumbled to a 2-1/2 year low on Tuesday, falling eight of the past nine sessions, during which the index lost about 15 percent.

Citic Securities is the biggest Hong Kong listing since the $2.5 billion initial public offering by luxury goods maker Prada in June.

The offering is the first of nearly $35 billion in share sales in Hong Kong and China still planned in the coming months by financial companies, including Haitong Securities, New China Life and China Guangfa Bank.

Investors have been on high alert and remain wary of equity markets because of lingering concerns over Europe’s debt troubles and fears of a slowdown in the U.S. and Chinese economies.

Just last month, some $4.5 billion worth of deals were pulled in Hong Kong including Sany Heavy Industry and rival XCMG Construction Machinery Co Ltd , underscoring tepid investor appetite for IPOs

Apart from Citic Securities, only five other companies including shoemaker Hongguo International Holding and tea company Tenfu Holdings sold stock in Hong Kong the past two weeks since offerings resumed after a two-month hiatus.

The five offerings raised a total of $510 million. The slowdown in share sales the past months in Hong Kong, Singapore and other main markets in the region contributed to a 49 percent slump in Asia Pacific equity capital markets in the third quarter from a year earlier.

Securities companies in China are forecast to post annual profit growth of nearly 20 percent between 2011 and 2013, buoyed by an increase in capital markets activity and new businesses such as margin financing and private equity investments, BOC International estimated.

Citic Securities was the sole global coordinator of the offer, with a group of banks including BOC International, CCB International, Bank of America Merrill Lynch and Credit Agricole’s CLSA unit helping to underwrite the deal. (Reporting by Elzio Barreto; Editing by Denny Thomas and Michael Flaherty)

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