... and so I will buy some of this, for hopefully a quick gain, at least not a loss:
biz.scmp.com
Thursday, July 18, 2002
Doubts bear on BoC price
ERIC NG and CHI-CHU TSCHANG
Turbulence in the global equities markets is expected to force BoC Hong Kong (Holdings) to price its HK$25.2 billion global share offering towards the lower end of its indicative price range.
Banking sources said the SAR's second-largest bank by assets was under pressure to price its shares below 1.5 times book value, or less than about HK$7.85 per share.
BoC Hong Kong's indicative price range is HK$6.93 to HK$9.50. The underwriters have yet to price the shares and will not announce the initial offering price until July 23.
''We are still waiting for the book to finish. Equally importantly, the retail period is still going on until Thursday noon. We won't be able to decide on the pricing, and also the company is still on the road,'' one underwriting source said.
Many fund managers have indicated they are not inclined to pay much more than HK$8 per share given the Bank of China's historically high non-performing loans. BoC Hong Kong is the listing unit of Bank of China (Hong Kong).
''If the price is HK$8 or more, I would not subscribe,'' said a fund manager at a North American asset management company.
''I heard the institutional side of the issue is about 1.5 times oversubscribed at the moment. It suggests the professional investors are not head over heels over it.''
According to banking sources, the BoC Hong Kong global offering has already attracted US$6 billion to US$7 billion from institutional investors, which means the offering is only 2.14 times subscribed, assuming a maximum HK$9.50 per share.
Hong Kong corporate investors have subscribed to US$3 billion of BoC Hong Kong's offering, the sources said, adding that Japanese investors had ordered another US$1 billion.
United States and European institutional investors, who have been battered by slumping stock markets in the West, are more cautious about investing in a Chinese bank and have subscribed between US$2 billion and US$3 billion, the sources said.
Bank of China management is in the US to drum up more support from Wall Street.
Tung Tai Securities associate director Kenny Tang Sing-hing said the recent volatility in the global equities market would inevitably have a negative impact on BoC Hong Kong's share offering.
''I think the impact will not be that significant on the subscription level, after all the retail investors will still be keen to buy its shares given the 5 per cent discount, its brand name and expectation it will soon join major stock indices. The pressure will be on the pricing,'' he said.
Sources said retail investors had subscribed to US$2 billion of BoC Hong Kong's initial public offering, or 7.14 times the shares available in the retail tranche.
The bank will make a big push today - the last day of the retail subscription period - to attract retail investors by adding 24 more branches accepting the IPO application forms.
The 77 branches eligible to accept the application forms will open their doors at 7am, two hours earlier than usual, BoC Hong Kong said in a statement issued last night.
One theory making the rounds in the market is that once the shares start trading on July 25, the benchmark Hang Seng Index will start heading up again.
According to this theory, the recent slump in the Hong Kong stock market is partially due to the BoC Hong Kong offering sucking up liquidity from investors who have subscribed to Hong Kong's largest public offering in two years.
''Its peers like HSBC and Hang Seng Bank have seen their share prices fall amid the market turbulence,'' Mr Tang said.
Since BoC Hong Kong began its international marketing roadshow for the share offering on July 8, HSBC Holdings' share price has fallen 3.8 per cent to close at HK$86.75 yesterday, while Hang Seng Bank has dropped 2 per cent to HK$83.
After the BoC Hong Kong IPO, funds would start flowing back into the stock market again, some analysts said.
''Because of the oversubscription, a lot of the investors will not get their shares allotted. Then the liquidity will go back to the market and provide support for the market,'' KGI Asia director Ben Kwong Man-bun said. |
