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Carmaker's stock price runs into Great Wall
By Vivian Jin |
September 29, 2011, Thursday
|
Print Edition
Print Edition
GREAT Wall Motor made an inauspicious debut on the Shanghai stock market yesterday, a victim of sluggish investor sentiment in stocks as well as a dim outlook for China's auto industry.
Shares of Great Wall, China's largest manufacturer of sport-utility vehicles and pick-ups, tumbled 8.85 percent to 11.85 yuan (US$1.9) yesterday. The shares opened at 13 yuan, lower than the initial public offering price of 14 yuan, and lost 5.5 percent in the morning trade session.
The Shanghai Composite Index shed 1 percent yesterday.
The Hebei Province-based car maker raised nearly 3.9 billion yuan in its IPO on the Shanghai Stock Exchange, with the proceeds used to fund output expansion and boost its passenger car business.
"It is more difficult for large-cap stocks such as Great Wall to draw interest from investors as a weak market confidence squeezes liquidity," said Cheng Yan, an analyst at Huatai Securities.
"Great Wall's expansion into the passenger car segment had also failed to woo investors amid a slack outlook for the overall auto industry," she noted.
But Cheng predicted there is not much room for its shares to dip further as its current stock valuation is reasonable.
After a surge of 32 percent last year, China's auto sales slowed to 3 percent in the first eight months of this year after the government removed purchase incentives and major cities curbed vehicle population, denting demand.
Analysts forecast the stock market to be sluggish in the fourth quarter as economic growth wanes, and the government is likely to maintain its tight monetary stance amid high inflation.
Shares of Great Wall, China's largest manufacturer of sport-utility vehicles and pick-ups, tumbled 8.85 percent to 11.85 yuan (US$1.9) yesterday. The shares opened at 13 yuan, lower than the initial public offering price of 14 yuan, and lost 5.5 percent in the morning trade session.
The Shanghai Composite Index shed 1 percent yesterday.
The Hebei Province-based car maker raised nearly 3.9 billion yuan in its IPO on the Shanghai Stock Exchange, with the proceeds used to fund output expansion and boost its passenger car business.
"It is more difficult for large-cap stocks such as Great Wall to draw interest from investors as a weak market confidence squeezes liquidity," said Cheng Yan, an analyst at Huatai Securities.
"Great Wall's expansion into the passenger car segment had also failed to woo investors amid a slack outlook for the overall auto industry," she noted.
But Cheng predicted there is not much room for its shares to dip further as its current stock valuation is reasonable.
After a surge of 32 percent last year, China's auto sales slowed to 3 percent in the first eight months of this year after the government removed purchase incentives and major cities curbed vehicle population, denting demand.
Analysts forecast the stock market to be sluggish in the fourth quarter as economic growth wanes, and the government is likely to maintain its tight monetary stance amid high inflation.
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