Not helping the battle against real estate prices is Country Garden, a South China property developer. It rose more than 35% over its offering price on Friday, reflecting strong investor confidence no matter how the government tries to hose it down.
Ricky Cheung, executive vice-president of Enlighten Securities and Futures, said ‘The opening bid was lower than expected due to the bleak atmosphere caused by the imminent launch of austerity measures. But the closing price is within our range of expectation.’
The initial public offering of Country Garden, which was in Hong Kong, raised more than HK$330 billion. It was the second-largest IPO in the history of the Hong Kong exchange.
The price may have been helped by Lee Shau-kee, chairman of Henderson Land Development, (seen in our illustration) Hong Kong’s third-largest developer, who chose Country Garden as one of the five hottest picks among mainland property stocks.
Yeung Kwok-keung, Country Garden’s chairman, said the company would quicken expansion outside Guangdong Province. He said at the listing ceremony, ‘We will apply our business model into other mainland cities and strive to diversify our products. We will continue to pursue low land cost strategy, and we’ve identified five cities in Hunan, Jiangsu, Inner Mongolia and Liaoning as our next targets.’
Country Garden has reported a 300% compound annual net profit growth rate over the last three years. Figures which are not likely to hose down a real estate boom.