Citic Sec makes weak HK debut after $1.7 billion offer

Thu Oct 6, 2011 11:03am EDT
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By Elzio Barreto

HONG KONG (Reuters) - Citic Securities Co Ltd, China's largest listed brokerage, made a weak debut in Hong Kong on Thursday, underscoring poor appetite for new share sales in the face of global market volatility.

Its stock fell as much as 10.5 percent before closing unchanged, while the broader Hong Kong index ended up nearly 6 percent.

The disappointing start for Citic Securities, which raised a less-than-expected $1.7 billion in its first listing outside the mainland, could dash the hopes of other Chinese firms planning to raise funds in Hong Kong, the world's biggest IPO market for the past two years.

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.

"It's a very difficult time for any IPO because market sentiment is so weak right now," said Patrick Yiu, a director at CASH Asset Management. "Investors want to look for stocks now with a track record with very low valuations. They don't have the appetite for new stocks."

Citic Securities (6030.HK: Quote) closed at HK$13.30, unchanged from its listing price. The benchmark Hong Kong stock exchange index .HSI closed up 5.7 percent, while the financial sector sub-index .HSHFI jumped 6.5 percent.

Citic Securities Corporate Finance (HK) Ltd, or Citics CF Hong Kong, was the so-called stabilizing manager for the offering. Stabilizing managers are often hired to prevent a decline below the offer price for stock listings.

The company sold shares at the bottom of a revised price range of HK$13.30-$15.20 a share last week.   Continued...

<p>A man walks by the logo of CITIC Securities at a branch of the security brokerage house in Beijing March 30, 2010.REUTERS/Christina Hu</p>