Sands China and China Longyuan IPOs

Darlington Musarurwa
23 Nov, 2009
New York City

Stocks in Hong Kong and Shanghai traded mixed as UBS warned of rising speculative attacks on the currency. Sands China Ltd completed its $2.5 billion public offering. The largest wind power generator China Longyuan Power plans to raise at least $2 billion in an initial public offering.

[R]6:00 AM New York, 6:00 PM Hong Kong – Stocks in Hong Kong and Shanghai traded mixed as UBS warned of rising speculative attacks on the currency. Sands China Ltd completed its $2.5 billion public offering. The largest wind power generator China Longyuan Power plans to raise at least $2 billion in an initial public offering.[/R]

Hong Kong benchmark index closed higher after resource stocks gained on an increase in gold price of 0.6% to $1,148 per ounce.

Shanghai stocks were however lifted by expectations that the Peoples’ Bank of China will maintain its loose monetary policy next year.

In Hong Kong trading Hang Seng Index gained 1.4% or 315.55 to 22,771.39, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, climbed 2.2% or 295.40 to 13,625.06. In Shanghai trading CSI 300 Index advanced 0.1% or 34.50 to 3,665.51.

Daily turnover on main-board fell to HK$51.9 billion from HK$60.5 billion on Friday.

Economists Warn of Speculative Capital

Xinhua News Agency reported that UBS AG economist Wang Tao said today Beijing must allow a one-time appreciation in the yuan’s value and widen the currency’s trading band in order to prevent speculative capital that might drive inflation.

According to the report, China’s State Council last month admitted that managing liquidity is increasingly difficult.

“China’s economic fundamental meant that the yuan should strengthen. The central bank will find it harder to manage liquidity and inflation when a flood of speculative funds returns, betting on the yuan’s appreciation,” said Wang.

Sands China Raises H$20 Billion

The casino operator Sands China Ltd completed the sale of 1.87 billion shares and raised HK$19.4 billion or $2.5 billion. The initial public offering of 23.2% stake sale in the casino will provide much needed capital to restart the stalled construction projects in Macau.

The company is a subsidiary of Las Vegas Sands Corp controlled by billionaire Sheldon Adelson.

China Longyuan Plans IPO

China Longyuan Power Group Corp, the wind power generator is looking to raise HK$17.5 billion in a sale of 2.14 billion shares. The news was first reported by Bloomberg and later confirmed by 123jump.com.

The company plans to price its offering per share between HK$6.20 and HK$8.20.

China Longyuan is a subsidiary of government controlled electric power generator China Goudian Corp and operates one quarter of China’s wind power generating capacity.

Gainers & Losers

China’s financial stocks rose on expectations the Beijing will maintain its loose monetary stance to next year. China Construction Bank increased 4.1%, Industrial and Commercial Bank of China jumped 3.2%.

China Life gained 2.5% and Ping An soared 4.5% after Deutsche Bank increased the rating on the stock to “buy.”

Commodity stocks increased. Zijing Mining edged up 4.8%, Realgold Mining advanced 6.4%, Chalco jumped 2% and Jiangxi Copper rose 3.5%.

Shandong Gold rose 4.4% to Rmb77.82 as gold prices gained 0.6% to $1,148 per ounce

Cathay Pacific gained 1.6% after the international carrier reported that business conditions are improving.

Brokerage stocks were mixed. Taifook Securities advanced 0.6% on the news that Haitong Securities will purchase 52.8% equity stake from NWS for $235 million.

The trading in Haitong was suspended.

CITIC Securities climbed 0.3% to Rmb30.96 yuan.

Auto stocks also gained on bullish future prospects in the industry next year. Dongfeng Automobile increased 10 % to Rmb7.03.

SAIC Motor Corp increased 2% after announcing it projects sales for the year to be higher than earlier estimated.

Utility stocks fell on profit taking. Sichuan Xichang Electric Power dropped 1.2% to Rmb10.45.

China Vanke fell 0.6% on the UBS warnings that China risks inflows of speculative funds.