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UPDATE 1-Upbeat mood for Hong Kong IPOs crumbles on market weakness
June 13, 2013 / 9:21 AM / in 5 years

UPDATE 1-Upbeat mood for Hong Kong IPOs crumbles on market weakness

* Hong Kong IPO volumes tripled to $4.4 bln this year

* Hopewell Hong Kong Properties delays listing

* China Harmony Auto Holding plunges on debut

* Outlook cloudy for Macau Legend, NW Hotel Investments

* But Wuzhou makes solid start on its first trading day (Recasts on outlook for Hong Kong IPO market)

By Elzio Barreto

HONG KONG, June 13 (Reuters) - Signs of vigour in Hong Kong’s IPO market appear to have been short-lived after Hopewell Hong Kong Properties Ltd became the second firm in a month to delay its offering plans and an auto dealership plunged on its debut on Thursday.

The slide in investor sentiment comes amid a sharp decline in stock prices and could weigh on other offers that are in the works in the region, bankers say.

In Hong Kong, these include a $786 million offering from casino operator Macau Legend Development Ltd and an up to $1 billion listing from NW Hotel Investments. In Singapore, Overseas Union Enterprise, a property firm owned by Indonesian tycoon Stephen Riady, is pre-marketing an up to $800 million real estate investment trust (REIT).

Hopewell Hong Kong Properties, a unit of Hopewell Holdings , had intended to raise up to $780 million.

While Hong Kong IPO volumes have more than tripled so far in 2013 to $4.42 billion from the same period last year, market sentiment has taken a beating in recent weeks on concerns that the U.S. Federal Reserve will unwind its ultra-easy monetary policy and on worries about a weaker Chinese economy.

These fears have hit Asian financial markets and the benchmark Hong Kong share index has tumbled 11 percent from a three-month peak hit on May 20.

“This is not a good time for IPOs, especially for Hong Kong property-related ones given that markets are jittery about the timing of the Fed’s tapering of its monetary stimulus,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong.

“It’s hard to say if the window for IPOs is going to stay shut until year end, I think we’re all going to take a wait-and-see attitude.”

IN RETREAT

The delay in Hopewell Hong Kong Properties’ offering comes after Mando China Holdings Ltd, controlled by South Korean auto parts maker Mando Corp, postponed its $270 million listing in late May, also citing adverse market conditions.

In particular, retail investors, who often set the tone for trading momentum, have been in retreat.

China Harmony Auto Holding Ltd, an auto dealership for BMWs, Rolls-Royces and Ferraris, plunged as much as 16.5 percent in its debut on Thursday after raising $215 million. Demand for the deal was only 1.6 times the number of shares available for retail investors.

In contrast, earlier this year retail investors flocked to a $1.8 billion offering from Sinopec Engineering and the $1.1 billion listing China Galaxy Securities Co Ltd, both of which were about 30 times oversubscribed.

In Singapore, weak post-debut performances from REITs also underscore the crumbling in sentiment.

Mapletree Greater China Commercial Trust, Singapore’s biggest IPO this year, has given up all of its earlier gains to trade just above its IPO price of S$0.93. The stock has fallen 15 percent over the past one month and is down 8.5 percent over three months.

Business trust Asian Pay Television Trust which was the second-biggest IPO in Singapore this year, is trading 11 percent below its IPO price.

The day was not completely gloomy in terms of IPO news.

Wuzhou International, a property developer in mainland China, climbed nearly 5 percent in its debut after raising $179 million in its IPO.

But even so, Wuzhou priced its offering near the bottom of its indicative range and demand from individual investors accounted for only half of the shares on offer in the retail tranche. (Additional reporting by Clement Tan, Donny Kwok and Saeed Azhar; Editing by Denny Thomas and Edwina Gibbs)

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