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February 10, 2010

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Stock is 3rd debutant to decline

China First Heavy Industries Co yesterday became the third firm to fall below its offer price on its trading debut in the last two weeks, further evidence of investors beginning to lose appetite for new stocks amid a market slump.

Shares of the country's biggest heavy machinery maker fell to 5.52 yuan (81 US cents) each, a 3.16 percent decline from the initial public offering price of 5.70 yuan. The key Shanghai Composite Index added 0.47 percent to 2,948.84.

The Heilongjiang-based company set its IPO price below the top of an indicated range of 5 yuan to 5.80 yuan following a lackluster investor response in a sagging stock market amid increased stock supplies and higher valuations of other shares.

The subscription rate of its retail tranche hit 4.98 percent, the highest since the securities regulator resumed new share sales in June.

China XD Electric Co was the first firm to drop below its IPO price on its trading debut since 2004, followed by China Erzhong Group Deyang Heavy Industries Co.

A record 37 companies launched IPOs last month and raised 46.97 billion yuan, both a record high since 2004, said Zero2IPO Research Center.

New stocks were favored as they surged on their debut. The situation changed after the index declined amid heavy supplies.


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