Farming out Shares: ABC will finally go public tomorrow, but
SHARES IN Hong Kong broke a two-day losing spell, finishing the day up 0.2% at 20,726.68 on signs of renewed vigor in the property market.
Meanwhile, A-shares on the mainland continued their losing ways, with the Shanghai Composite Index shedding 0.7% to close at 2,535.28, its fourth consecutive trading day of declines.
Analysts say renewed liquidity worries connected to tomorrow’s massive IPO by Agricultural Bank of China hit the benchmark index again.
The Shenzhen Composite Index which covers the country’s smaller second exchange lost 1.5% to finish the day at 1,012.91.
The Agricultural Bank of China, the only of the Big Four state-owned banks not to go public, is planning to float 53 bln shares in Hong Kong and Shanghai tomorrow, with IPO funds of some 25 bln usd expected.
This would outdo the current IPO record holder, ICBC, which raised some 19 bln usd three years ago.
The sheer size of this newcomer to an already bearish capital market is causing investors to harbor serious concerns about the strains on liquidity the lender’s IPO would bring to the system, thus drawing capital away from already listed counters.
Trading on the eve of the world’s biggest ever IPO led to many investors taking a sideline position, preferring to ‘wait and see’ how the market would absorb so many shares before changing hands.
This helped drag down trading turnover on the day, with the diminished volume dampening enthusiasm for financial sector stocks.
New No.1: ABC's expected 25 bln usd IPO will eclipse current leader ICBC's of some three years ago
Brokerages slid on the tepid trading turnover with Citic Securities, China's No.1 brokerage by market value, losing 2.7% to 12.83 yuan, while Haitong Securities shed 0.5% to 10.27 yuan.
Energy prices took a hit amid new calls by economic regulators for more stable prices in the sector even as demand continued to climb.
Shanxi Xishan Coal and Electricity Power Co fell 4.2% to 20.05 yuan, while top coal producer China Shenhua Energy lost 1.5% to 23.15 yuan.
Airlines, one of the chief beneficiaries of a stronger yuan versus the US dollar, gave up recently gained ground on relative stasis in the exchange rate.
Air China fell by 4.5% to 11.11 yuan, while China Southern Airlines was down 3.6% at 6.8 yuan.
The yuan weakened to 6.7937 to the greenback from Friday's close of 6.7935 despite recent hints from Beijing that it would allow its currency to strengthen faster and renewed pressure from Washington during the G20 gathering in Toronto.
A stronger yuan makes foreign-currency denominated debt less burdensome to repay.
Hang Seng Ends Losing Streak
The Hang Seng Index, the benchmark indicator for shares listed in Hong Kong, closed higher for the first time in three trading days, propelled by both property developers and oil firms, after the local English-language daily Standard reported that locally listed real estate firm Sino Land Co has been selling residential units at higher prices of late.
Sino Land, the top performer on the Hang Seng Property Index in June, rose 2.2%.
Meanwhile, crude price strength buoyed oil drillers, pushing Cnooc Ltd up 2.5%.
However, Hong Kong-listed China Shenhua Energy Co, the country's No. 1 coal producer, fell 2.9% on government calls for “stable” energy prices.
See last week's: CHINA/HK: Shares jump on yuan chatter, but is Beijing bluffing?
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