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Mainland to lead global IPO market recovery

admin — Sat, 13 Mar 2010 16:01:43 +0000

Mainland to lead global IPO market recovery

China will lead the recovery of the global initial public offering (IPO) market, consultancy firm Ernst &Young said in its latest survey of institutional investors across the world.
The survey said China was the first IPO market to recover from the global economic downturn. Over 75 percent of the respondents said they expect the market to recover in the third and fourth quarter of this year.
The online survey was conducted among 305 institutional investors between August and early September this year.
\”The potential for continuing growth and higher safety in the market are the reasons for the funds flowing into the Chinese IPO market,\” said Ringo Choi, regional managing partner, China South at Ernst &Young.
China-based IPOs accounted for 65 percent of the funds raised globally during the third quarter of this year. The trend is expected to be strong in China next year also, the survey said.
\”China-based companies have been at the forefront of capital market activities and have clocked more deals than North America and Europe put together,\” Choi said.
China State Construction Engineering raised a total of $7.3 billion from its July offering in what has so far been the second largest global IPO this year after the $8-billion float of Brazilian bank Banco Santander Brasil.
China Metallurgical Construction\’s $2.8-billion IPO and Everbright Securities\’ $1.7-billion IPO were also among the top 10 global IPOs in 2009.
The growing trend is underpinned by the strong sentiment of global investors in the Chinese market with 64 percent of the survey respondents expecting to increase their level of investment in the country\’s IPO stocks.
Private equity (PE) and venture capital (VC) firms are also expected to bolster IPO activities in the country, especially after the launch of ChiNext, China\’s NASDAQ-style trading board.
\”Private equity backed companies are playing a significant role in driving public offerings and they are poised to increase in importance in China given the backlog of companies wanting to divest holdings,\” said Terence Ho, Strategic Growth Markets and IPO leader, Greater China at Ernst &Young.
Twenty of the first 28 companies that went public on the ChiNext are VC/PE-backed companies.
\”This trend will continue as PE/VC investors back high growth enterprises which dovetails China\’s national strategy of promoting innovation,\” said Ho.

Equities edge up, led by financials, tech

admin — Sat, 13 Mar 2010 16:00:43 +0000

Equities edge up, led by financials, tech

Mainland stocks rose the most in a week, led by financial and technology companies, on speculation recent declines were excessive given earnings growth prospects.
China Merchants Bank Co advanced 3.2 percent after CIMB Research upgraded the bank on the prospect it will benefit more than peers from interest-rate increases.
Air China Ltd, the nation\’s largest international carrier, and China Southern Airlines, the country\’s biggest carrier by fleet size, climbed at least 3.7 percent. Shenzhen Kaifa Technology Co led gains for computer companies on an improved industry outlook.
The Shanghai Composite Index rose 15.90, or 0.5 percent, to 2,992.84 at the close. The CSI 300 Index added 0.7 percent to 3,203.97.
\”From the medium- and long-term perspective, banks are very cheap and their dividend yields are attractive,\” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. \”However, the expectations about interest-rate increases are limiting any gains in the market.\”
While Hong Kong\’s Hang Seng Index slipped 0.3 percent to close at 21,022.93 on Tuesday, led by developers, after the city\’s government said it would release apartments on to the market to cool property prices.
Bloomberg News
Market roundup

Chinese shares jump above 3,300 mark

admin — Sat, 13 Mar 2010 15:59:43 +0000

Chinese shares jump above 3,300 mark

Chinese equities continued the upward trend for the fourth consecutive trading day Wednesday and surpassed the psychological 3,300 mark.
The Shanghai Composite Index, which covers both A and B shares, climbed 0.62 percent to 3,303.23 points.
The Shenzhen Component Index edged down 0.21 percent to 13,642.35 points.
Gains outnumbered losses by 486 to 389 in Shanghai and 431 to 363 in Shenzhen.

Strong recovery already priced in by equity traders

admin — Sat, 13 Mar 2010 15:58:43 +0000

Strong recovery \’already priced in\’ by equity traders

One belief technical traders hold dear is that the market is always right. But the substantial declines in China\’s A-share market in the past week may suggest that the market sometimes can be wrong, observers said.
The government\’s aggressive move toward a tightened monetary policy could be misread by most investors who tend to overlook the more important economic fundamentals that project a robust economic growth in 2010, Niu Wenxin, a financial commentator on China Central Television wrote in his blog.
\”Investors shouldn\’t be too worried because the recent declines happened at the beginning of an economic growth cycle rather than a recession cycle,\” Niu wrote. \”It\’s a time when you can take a short position but you should not stop seeking buying opportunities that may arise.\”
Shrinking market liquidity is the top concern because of the government\’s tightened credit policy to rein in excessive bank lending that hit the record high of 9.5 trillion yuan ($1.39 trillion) last year. Fears of an early exit from the stimulus package hampered market performance, which dipped below the psychologically important level of 3,000 points last week to a three-month low.
\”What the government is trying to control is the rhythm of bank lending not the actual amount of new loans,\” Niu wrote. \”The excessive credit expansion in 2009 is not going to be sustainable and it must be reduced to a normal level which has been the market consensus.\”
China\’s Banking Regulatory Commission has set the new lending cap at 7.5 trillion yuan in 2010. Although the amount is lower than last year, it is still at an unprecedentedly high level.
One thing seems certain: The sweet period of rapid economic recovery with no negative policy response has passed and strong corporate earnings growth will have to compete with the government\’s tighter monetary policy to combat inflation.
Niu noted that share prices of companies with promising prospects have risen several times while the price to earnings ratio still remained around 20, indicating that the performance of these companies has substantially improved at a fast pace.
Some analysts pointed out the recent decline was a perfect example of how the expectation of a strong economic recovery was already priced into the previous rise. And the future direction of the index will largely depend on how the real economic growth offsets the negative impact of the market concerns over policy tightening.
\”The progress from recovery to solid growth is unlikely to be interrupted but the market may question the sustainability of the economic growth once the government shifts from increasing the banking reserve ratio to interest rates,\” said Yin Guohong, an analyst at Dongxing Securities. \”It means that investors are likely to endure a pretty painful period because the tightened policy will extend the fluctuation period and there won\’t be any trend opportunities.\”
Yin noted that the market tends to move downward by penetrating the 250-day moving average before a strong bull trend so it will probably bottom at around 2,800 points. Despite the recent sharp fluctuations, market players remain optimistic about the outlook of China\’s economic growth in 2010, which appears strong enough to contend with rising interest rates and higher inflation.
\”We are positive on China in 2010. Earnings growth will be fuelled by recovering exports, increasing consumer activity and continued government spending,\” said Jing Ning, manager of BlackRock China Fund.

Chinese shares close higher on Tuesday

admin — Sat, 13 Mar 2010 15:57:43 +0000

Chinese shares close higher on Tuesday

Chinese equities rose in active trade on Tuesday, as a report of extended new loans in October lifted optimism for sustained economic growth.
The benchmark Shanghai Composite Index gained 37.58 points, or 1.22 percent, to end at 3,114.23. The Shenzhen Component Index added 144.20 points, or 1.13 percent, to close at 12,859.86.
Combined turnover expanded to 289.94 billion yuan (42.46 billion U.S. dollars), from 254.17 billion yuan on Monday.
The Nasdaq-style ChiNext market for start-up stocks, which began trade last Friday, weakened for a second day after 20 of its28 stocks fell by the daily limit of 10 percent on Monday.
Twenty three of the 28 stocks ended lower on Tuesday, with 19 down by more than five percent and four sliding by their 10 percent daily limit.

Hong Kong stocks close 0.83% higher

admin — Sat, 13 Mar 2010 15:56:43 +0000

Hong Kong stocks close 0.83% higher

Hong Kong stocks advanced 0.83 percent to end at another more than 14-month high on Tuesday, tracking overnight gains on the U.S. market.
The benchmark Hang Seng Index rose 184.50 points to 22,384.96 after trading between 22,260.41 and 22,451.62. It was its highest closing level since ending at 22,514, on Aug. 4, 2008.
Total turnover went up to 74.18 billion HK dollars (about 9.58 billion U. S. dollars) from Monday\’s 60.63 billion HK dollars (about 7.8 billion U. S. dollars).
Analysts said they expected the blue-chip index to test 22,500 points later this week, driven by strength in the U.S. market.
Three of the four major categories gained ground. The properties sub-index added most at 5.79 percent, followed by the finance at 0.58 percent, the commerce and industry at 0.04 percent, while the utilities dropped 0.71 percent.
Market heavyweight HSBC Holdings was down 0.45 percent to 89.30HK dollars. Hang Seng Bank went up 0.45 percent to 111.00 HK dollars. China Mobile, the leading mobile carrier on the Chinese mainland, fell 0.69 percent to close at 78.75 HK dollars.
Local properties were among the biggest gainers. Cheung Kong surged 7.09 percent to 107.30 HK dollars. Henderson Land edged up 3.29 percent and SHK PPT jumped 7.74 percent.
As for mainland-based commercial lenders, Bank of China rose 1.34 percent to 4.54 HK dollars. ICBC gained 2.42 percent to 6.34 HK dollars. CCB moved up 1.31 percent to 6.94 HK dollars. Bank of Communications shed 0.58 percent to 10.38 HK dollars.
PetroChina and Sinopec fell 0.20 percent and 1.56 percent respectively. Offshore oil producer CNOOC gained 0.32 percent. (7.742 HK dollars = 1 U.S. dollar)

Bearish sentiments uppermost

admin — Sat, 13 Mar 2010 15:55:43 +0000

Bearish sentiments uppermost

Bearish sentiments are likely to hover over China\’s post-holiday stock market as market liquidity again concerns Chinese investors.
According to an online survey conducted by Sina.com, one of the largest portal websites in the country, more than 50 percent of netizens said the stock market would probably maintain the downward momentum after the National Day holiday.
The Shanghai index fell 4.2 percent in the week prior to the holiday, the most in six weeks, as commodity prices slumped and investors speculated rising stock supply would divert funds from existing equities.
The gauge was down 6.9 percent the third quarter, the worst performance by a major global benchmark index, on concern a slump in new lending might derail the economic rebound.

According to the survey, the unlocked binge of non-tradable shares in October is the top concern for investors, as the unprecedented climax for unlocked non-tradable shares would show up this month.
Statistics from Chinese financial data provider Wind Info showed that a total of about 2 trillion yuan of non-tradable shares will be unlocked in October, accounting for 20 percent of the total market value.
In addition, investors\’ confidence and economic indicators in the third quarter are also among the top factors that concern investors most.
The consumer price index for September, a major inflation gauge, is to be released soon and third quarter earnings reports are slated to come out later this month.
The to-be-launched growth enterprise board (GEB) and the performance of overseas markets also worried many investors, the survey said.
The NASDAQ-style board could also divert investors\’ attention, although it is not a major threat to the main boards because of the limited funds it could freeze. Industry analysts also said that a host of new listings on the main boards and several additional share placements that could raise chunky funds are also likely to take place in the fourth quarter, putting pressure on market liquidity.
Despite all the concerns, the survey also revealed that about 44 percent of investors believe the market will embrace a rally after the national holiday.
\”I would increase shareholdings as opportunities may emerge when the third quarter earnings prove encouraging,\” an experienced retail investor surnamed Zheng said.

Chinese shares up 3.20% Monday

admin — Sat, 13 Mar 2010 15:54:43 +0000

Chinese shares up 3.20% Monday

Chinese equities rose 3.20 percent Monday, led by robust securities and agricultural shares.
The benchmark Shanghai Composite Index was up 3.20 percent, or 99.04 points, to close at 3,195.30 points.
The Shenzhen Component Index gained 4.74 percent, or 610.63 points, to close at 13,486.77 points.
Combined turnover shrank to 270.83 billion yuan ($41 billion) from 288.04 billion yuan on the previous trading day.

Investors may start stock index futures account application Mon

admin — Sat, 13 Mar 2010 15:06:43 +0000

Investors may start stock index futures account application Mon

Investors can apply for accounts to trade stock index futures from 9:00 a.m. Monday, the Shanghai-based China Financial Futures Exchange (CFFE) said Sunday in a statement on its website.
Investors who want to trade stock index futures must have a minimum 500,000 yuan (73,206 U.S. dollars) to open an account, according to the CFFE.
The CFFE released specific trading rules for index futures Saturday on its website.
China\’s securities regulator on Jan. 12 approved the CFFE to trade stock index futures.
Stock index futures are an agreement to buy or sell an index at a certain price on an agreed date. Index futures will give investors a mechanism to profit from declines in stock prices, allow them to hedge risks and help ease market fluctuations.
China\’s A-share stock bourses in Shanghai and Shenzhen will resume trade Monday. They stayed closed during the one-week Spring Festival, the most important Chinese traditional festival for family reunions.

Emerging market IPOs turn hot investor picks

admin — Sat, 13 Mar 2010 15:05:43 +0000

Emerging market IPOs turn hot investor picks

Initial public offerings (IPOs) in emerging nations are returning about 15 times more than IPOs in developed countries even as companies from China to Brazil flood the market with more shares than ever.
Listings by Longfor Properties Co, Banco Santander (Brasil) SA and Kuala Lumpur-based Maxis Bhd helped raise $39 billion in emerging markets during the three months ending on Monday, data compiled by Bloomberg show. That outstrips the amount sold in IPOs from 23 industrialized nations by $21.3 billion, the biggest gap since at least 2000, the data show.
While IPOs in developing markets rose 21 percent and offerings in the Chinese mainland rallied 88 percent in the past three months, the \”avalanche\” of sales may help spur a 20 percent drop in share prices, according to Mark Mobius.
\”Investors are a lot more confident about emerging markets than they are in developed markets,\” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors. \”Investors realize that the growth potential is in the emerging world.\”
Thirty-seven companies from the nations in the MSCI Emerging Markets Index have sold shares in public offerings this month, bringing the numbers of IPOs since September to 149, according to data compiled by Bloomberg. The sales have been propelled by a 98 percent rally in MSCI\’s gauge of developing countries since March 2.
The surge in offerings will put \”downward pressure\” on prices, according to Mobius, who oversees about $25 billion of developing-nation assets at Templeton Asset Management Ltd. The MSCI Emerging Markets Index slid 2.5 percent last week, the first decline in a month, as Dubai\’s attempt to delay debt repayment unnerved investors.
\”I\’ve been cautious because I\’ve felt that there would be a significant correction,\” Mobius said from Hanoi in a Bloomberg Television interview on Nov 27. \”With these IPOs in the pipeline, that will tend to suppress the emerging markets.\”
No US IPOs are scheduled until Dec 9, as the pace of offerings slows after the Thanksgiving holiday, according to Bloomberg data.
Companies in developing nations have grown more successful in attracting money since March, when equity markets bottomed after the worst financial crisis since the Great Depression.
IPOs in emerging markets raised $677 million more than those from industrialized countries in the three months ended in April, data compiled by Bloomberg show. That advantage has now widened to $21.3 billion in the September-to-November period.
High growth
Companies in emerging nations are offering more shares as economists project that growth will outpace the US by as much as three times. China\’s gross domestic product will expand 9.5 percent next year and Brazil\’s will rise 3.8 percent, estimates compiled by Bloomberg show. That compares with 2.6 percent in America and 1.2 percent for the euro zone and Japan.
\”Emerging markets are where everyone wants to have their money,\” said John Ditierri, who helps oversee $11 billion in equities at Emerging Markets Management. \”If you go through the list of investment options, you want to have a higher allocation than you did before.\”
Buyers of IPOs from emerging markets have also been rewarded with bigger gains. Since September, companies with initial offerings have climbed a median 21 percent in the first month of trading, data compiled by Bloomberg show. That compares with a 1.4 percent advance by IPOs in developed nations.