Tue, Jul 14, 2009 - Page 11 News List

China approves huge share sale


China State Construction Engineering Corp (中國建築工程) got final approval for what may be the nation’s biggest initial public offering (IPO) in two years and said it would use the money to fund 40.5 billion yuan (US$5.9 billion) in projects.

China’s largest housing contractor said it would start the sale of as many as 12 billion shares, or as much as 40 percent of its capital after the offering, on July 22, Beijing-based State Construction said in a statement to the Shanghai stock exchange. The company had gained approval for the sale from the China Securities Regulatory Commission (CSRC), the release said.

The IPO will be the largest in China since PetroChina Co (中石油) sold 66.8 billion yuan of shares in October 2007, testing the local market’s ability to absorb new equity. PetroChina’s sale coincided with the start of a stock market rout that prompted China’s securities regulator to stop approving IPOs last September.

“Given the current liquidity conditions, the market can absorb the sale,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co (大眾保險), which oversees about US$285 million. “The biggest worry for investors is that it’s the start of the resumption of big IPOs.”

China began allowing public stock sales again last month and five companies have since gotten final approval for IPOs. Guilin Sanjin Pharmaceutical Co (桂林三金藥業) and Zhejiang Wanma Cable Co (浙江萬馬電纜), the first companies to go public in China since the ban was lifted, surged on their debuts on Friday, triggering stock suspensions under a new system aimed at curbing speculation.

The CSRC allowed smaller companies such as Sanjin Pharmaceutical to go public first to avoid disrupting the stock market rally. Sanjin Pharmaceutical raised 910.8 million yuan.

The Shanghai Composite Index has soared 70 percent this year, making it the world’s second-best performing stock benchmark. Sanjin Pharmaceutical and Wanma Cable received orders for hundreds of times the amount of stock they were selling as investors piled into new equities.

This story has been viewed 1710 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top