Investors such as Marc Faber see the demand for China Life Insur-ance Co's (中國人壽) US$3 billion initial public offering and others like it as evidence that this year's Asian stock rally may end soon.
Faber, who manages about US$150 million and publishes the monthly Gloom, Boom & Doom Report newsletter, said he recently cut his equity holdings in the region by half.
Investors' rush to buy the new shares is a "sign of speculation," he said.
"This wave of IPOs, I think it's crazy, it's not going to last," Faber said. "Everyone is so bullish about Asia. As a contrarian, this makes me think twice."
Shares of Great Wall Automobile Holdings Co (
PT Perusahaan Gas Negara, an Indonesian gas distributor, rose as much as 17 percent on its first day of trading in Jakarta.
China Life's initial sale, made in Hong Kong and the US, was the world's largest this year.
The company received orders for US$80 billion of stock, according to bankers who arranged the sale. The Beijing-based company printed enough applications for a third of Hong Kong's 7 million people, and the city accounted for US$25 billion of the demand.
Hong Kong investors ordered 683 times more shares of Great Wall Automobile than the company sold last week.
For PICC Property & Casualty Co (
Overseas investors sought 20 times as much stock in PT Bank Rakyat Indonesia, the country's fourth-largest lender by assets, as they could buy in its IPO last month.
Shares of Thailand's biggest brokerage by sales, Kim Eng Securities Thailand Pcl, more than doubled when they began trading on Dec. 3.
Asian IPOs have raised US$19 billion this year, including US$8.8 billion in the fourth quarter, according to Bloomberg data. The full-year figure is the highest since 2000.
Companies have raised another US$34 billion through sales of additional shares.
As the pace of IPOs accelerated, this year's rally in Asian stocks is slowing. Morgan Stanley Capital International Inc's Asia Pacific index, tracking companies in 14 countries, has risen just 4.6 percent in the fourth quarter. The index gained 25 percent in the first nine months of the year.
The euphoria for newly public companies reminds some fund managers of manias such as the rush into Chinese "red chip" stocks, or shares of government-controlled companies based in Hong Kong, during the 1990s.
The Hang Seng China-Affiliated Corporations Index, which tracks red chips, jumped fivefold between the end of 1995 and its peak on Aug. 27, 1997.
Since then, the red-chip index has plummeted 77 percent. The Hang Seng Index, Hong Kong's benchmark, and the MSCI Asia Pacific Index have both lost more than a fifth of their value.
"The red-chip boom of 1997 didn't exactly end happily," said Gary Greenberg, who worked for Peregrine Asset Management and Goldman, Sachs & Co. in Asia before setting up Muse Capital LLC, a London-based money manager with about US$10 million under management, last year.
Greenberg said he isn't rushing to buy all the shares being sold these days.
"There's a flood of paper now, and I'm passing on a lot of stuff," he said.
Others are less hesitant, judging by the performance of recent Asian IPOs. PICC surged 50 percent on its first day of trading last month, and has added 18 percent since then.
Rakyat debuted with an 11 percent gain after Indonesia's government sold its 41 percent stake for 4.17 trillion rupiah (US$486 million), the country's biggest stock sale in eight years.
Kim Eng's first-day, 152 percent advance on Dec. 3 was the biggest for a Thai company in two years. Even though the stock fell 8.9 percent last week, it's held onto most of the initial surge.
China Life and Great Wall Automobile will make their debuts in the coming week.
The flood of IPOs "is a healthy thing" because it provides investors with more options and forces Asian companies to become more competitive, said Scobie Ward, co-founder of Ward Ferry Management Ltd, a Hong Kong-based firm that manages more than US$500 million.
He declined to say which stocks he owns.
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