Asian Markets: Metallurgical loses face in Hong Kong
Metallurgical, the building company famous for its work on Beijing's Bird's Nest Olympic stadium, began trading today at HK$6.4 and ended the day lower at HK$5.6. The stock debuted in China this past Monday when it reaped a 28 percent gain – not very impressive compared with the average first-day gains of other Chinese IPOS this year, but an increase nonetheless. Today, Metallurgical also lost 5.1 percent in Shanghai.Some analysts say investors are concerned about the effect of the falling steel market on Metallurgical, which has business in that arena. Others say that the state-owned company is suffering because of its pricey valuation. On MSNBC, Louis Wong of Phillip Securities said this disappointment "could dampen sentiment toward upcoming IPOs." Not good news for the pack of Chinese companies that have recently announced plans to go public.
On a more positive note, Hong Kong's other highly touted IPO, Sinopharm, scored a 7.9 percent gain today. The massive drug distributor rose 16 percent in yesterday's debut.
Falling commodity prices dragged the Hong Kong market even lower: oil producer PetroChina Co. (PTR) fell 3 percent, Cnooc Ltd. (CEO) dipped 3.5 percent, Jiangxi Copper Co. Ltd. (JIXAY) slid 3.6 percent and Aluminum Corp. of China Ltd. (ACH) dropped 3.4 percent.
In China, the Shanghai Composite Index fell 0.4 percent to close at 2,854, with shipping companies faring particularly badly on declining transport rate indicators. Shanghai International Port Group Co. slipped 3.1 percent and China Shipping Development Co (CSDXY) was down 1.2 percent. This will come as no surprise to those who live on the Asian coasts and regularly see cargo ships sail by; many will have noticed that the red load line on the ship's hull marking the lowest point at which the ship can sit in the water has lately been cruising high above the water level. A sure sign that the ship is light, and business is bad.
In Japan, the Nikkei rose 1.7 percent to close at 10,544, catching up after a three-day holiday. Retailing and electronics stocks were up with clothing store company Fast Retailing Co. (FRCOF) gaining 5.3 percent. Toshiba Corp. (TOSBF) climbed 3.8 percent and Sony Corp. (SNE) leaped 3.1 percent after slashing the cost of its PlayStation 3. Sales of the game station have increased fourfold since the $100 discount kicked in. Nintendo Co. (NTDOY) says it is planning to follow Sony's lead by cutting the cost of its popular Wii.
Perhaps China's IPO market will take a lead from the electronics sellers, and begin pricing their initial offerings a bit more reasonably.