It was a month of highs and lows for the Shanghai and Hong Kong stock markets as a couple of landmark share offerings were followed by a period of underperformance and uncertainty.
PetroChina lit up the end of October by raising a record US$8.92 billion in its A-share IPO before seeing its shares begin trading at a 163% premium on the IPO price. This was enough to see PetroChina surge past ExxonMobil to become the world’s largest company by market value.
The strong demand for PetroChina shares indicates that there is still a healthy appetite among investors for new listings. And those looking to tap the market come from every realm of business – days before it was reported that a bevy of state shipbuilders were considering IPOs, the famous Peking duck restaurant chain Quanjude kicked off its own listing campaign.
But the market as a whole has struggled since.The Shanghai Composite Index (SCI) hit 6,000 points in mid-October but closed below 5,293.70 on November 20, having seen a month of volatility that reflects the wider economic uncertainties in China and the rest of the world.
Hong Kong has also entered a rut, despite Alibaba.com seeing its shares triple on their opening day following its US$1.5 billion IPO. The Hang Seng Index had fallen from its end-of-October peak of nearly 32,000 to 27,851.31 on November 20.
The slide was precipitated by Premier Wen Jiabao suggesting that more time was required to study the potential impact of the H-share “through train” scheme – which allows mainland individuals to invest in Hong Kong stocks – before it could be approved.