Hong Kong’s initial public offering (IPO) market — the biggest in the world last year — has hit the brakes with several companies shelving share sales as the Greek debt crisis pounds global markets.
Swire Properties (太古地產), a major real estate developer in the city, on Thursday pulled a planned US$3.09 billion share sale, just two days after Giti Tire (佳通輪胎), China’s largest tire maker, shelved a US$500 million IPO.
On Friday, iron ore producer China Tian Yuan Mining (天源礦業) halted its US$522 million issue, Dow Jones Newswires reported, citing an unnamed source.
The shelving of the IPOs comes as British insurer Prudential on Wednesday delayed launching a rights issue in London aimed at helping it fund a US$35.5 billion takeover of AIA, the Asian arm of troubled US insurer AIG.
Prudential, which remains in talks with Britain’s financial sector regulator over the deal, said on Friday that its planned listings on the Hong Kong and Singapore exchanges would also be delayed. It did not give a revised date for those listings, which will add trading venues without issuing new shares.
The announcement came hours after Hong Kong’s benchmark Hang Seng index fell on Friday to its lowest level in three months, closing at 19,920.29 points as investors fretted about the specter of a European fiscal implosion.
One company that has gone ahead with plans to list is French cosmetics maker L’Occitane, which saw its share price dive 4.51 percent to HK$14.40 (US$1.85) when it debuted in the territory on Friday after raising US$704 million in its IPO.
Brian Brenner, national director of tenant representation at global real estate services firm Jones Lang LaSalle in Hong Kong, said it made sense for companies to pull their share sales given current market conditions.
“If you’re going to float something, you want to do it in the strongest market possible because you only have one go at it,” he said.
“A lot of it has to do with the sentiment of the time more than anything else,” Brenner said. “It has been like a domino effect with the credit problems in Greece and Portugal, the delayed Prudential offering.”
Francis Lun (藺常念), general manager of Fulbright Securities (富昌證券) in Hong Kong, said given the global market conditions, more companies would likely drop their IPO plans in the coming weeks.
“The situation will last for some time until the Hang Seng Index bounces back to above 20,000 points,” Lun said.
But he said the market fall was due largely to external factors such as Greece’s debt crisis and the tumbling euro.
“Any turmoil in the Hong Kong market will be relatively limited compared to the overseas markets,” Lun said.
The listing slowdown comes as Hong Kong’s bourse aims to establish the city as an international IPO hub, shrinking its reliance on mainland Chinese companies.
Last year, firms listing in Hong Kong raised almost US$32 billion, making it the world’s largest IPO market last year.
In January, aluminum giant UC Rusal raised US$2.55 billion in a Hong Kong floatation, the first by a Russian company in the territory.
But Strikeforce Mining and Resources Plc, controlled by Rusal’s chief executive Oleg Deripaska, will delay its US$200 million Hong Kong IPO, Dow Jones reported, citing an unnamed source.
A company spokesperson could not be immediately reached.
Still, it may just be a matter of delaying IPOs until sentiment picks up rather than canceling them altogether, Brenner said.
“The level of business confidence is still pretty strong, especially in these parts,” he said.
“You’re seeing a lot of private equity firms coming into the market, you’re seeing expansion and companies increasing headcounts. There is a scarcity of availability in top-tier buildings [in Hong Kong],” he said.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
POWER BUILDUP: Powered by Nvidia’s B200 Blackwell chips, the data center would support MediaTek’s computing power demand and business growth, the company said Smartphone chip designer MediaTek Inc (聯發科) yesterday launched a new artificial intelligence (AI) data center with a maximum capacity of 45 megawatts to meet its rising demand for computing power required to develop new advanced chips for AI applications. The company has completed the first-phase computing power buildup at the data center in Miaoli County’s Tongluo Township (銅鑼), providing 15 megawatts of capacity to support its research and development (R&D) capabilities, despite an industrywide shortage of key components, MediaTek said. Supply constraints have plagued a wide range of key components, including memory chips, solid-state drives, power supply units and central
IMAGE SENSORS: The Japanese company would be the controlling shareholder of the venture, with development and production lines to be set up in Kumamoto Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it has signed a non-binding memorandum of understanding (MOU) with Sony Semiconductor Solutions Corp to create a joint venture to develop and produce next-generation images sensors. The partnership seeks to explore and address emerging opportunities in physical artificial intelligence (AI) applications, such as automotive and robotics, paving the way for innovations and expanded technological advancements, TSMC said in a statement. Sony would be the majority and controlling shareholder of the joint venture, the statement said, adding that the company would set up development and production lines in its newly constructed fab in Kumamoto Prefecture’s
RSS