Railroads News
- China Railway HK debut beats forecasts
Date: 10-Dec-2007 Sources: (Shenzhen Daily)
SHARES in China Railway Group rose as much as 30 percent in their Hong Kong debut Friday, beating forecasts, after the world's third-largest construction contractor raised US$5.5 billion in a Hong Kong and Shanghai initial public offering (IPO).
The performance bucks a recent rocky trend for Hong Kong IPOs as investors bet on strong earnings thanks to a railway investment boom in the world's fourth-largest economy, but many are still cautious on the outlook for IPOs after a series of weak debuts.
'I am surprised by China Railway's strong trading debut. I can see investors are buying in to narrow the gap with its surging domestic A shares,'said Adam Tam, fund manager at Pacific Sun Investment Management, referring to the company's domestic shares, which listed last Monday.
Shares in China Railway, which builds railways, highways, ports and other big-ticket projects, rose as high as HK$7.50 (US$0.97) Friday morning, buoyed by its near monopoly of China's rapidly developing railway construction sector.
They closed up 27 percent at HK$7.36, compared with an IPO price of HK$5.78, which was at the top of an indicated range.
Some market players said China Railway's gains were due in part to support from China's new sovereign wealth fund and did not necessarily bode well for upcoming IPOs.
China Investment Corp. bought US$100 million worth of shares in China Railway's offering, while other investors include the Government of Singapore Investment Corp. and China Life Insurance's parent.
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