[photopress:Real_estate_ZhangXin.jpg,full,alignright]Soho China, a Beijing property developer, puts its shares on the Hong Kong stock exchange in an IPO. The price soared 15% their first day of trading. This values the company at $6 billion.
The public offering raised nearly $1.7 billion for Soho China, or as much as Google raised in its 2004 initial stock offering in the United States.
The founders of Soho, Pan Shiyi and Zhang Xin, a husband-and-wife team known for their stylish Beijing developments, are now worth close to $4 billion on paper.
A Chinese real estate developer named Country Garden raised $1.9 billion in a Hong Kong stock offering this year.
The largest shareholder in Country Garden is the founder’s 26-year-old daughter, Yang Huiyan, seen here. She is now believed to be the richest person in China, with shares valued at about $16 billion.
Michael Pettis, an associate professor of finance at Beijing University and a former investment banker said:
‘This is sort of the best play in this market. In real estate you’re getting overinflated profits from borrowing money to get cheap land and then selling at inflated prices; and then you’ve got a stock market that is valuing a dollar of earnings at about 40 or 50 times. So you’ve got a bubble on top of a bubble.’
Source: International Herald Tribune