Cornerstones send HK stocks to trading graveyard

Bank of Tianjin Co

31/08/2016 04:41

(The author is a Reuters Breakingviews columnist. The opinions 
expressed are his own.) 
    By Quentin Webb 
    HONG KONG, Aug 31 (Reuters Breakingviews) - Chinese state 
firms are relying on friendly investors to list in Hong Kong. 
The practice leads to unrealistic pricing and immobile shares. 
The city's stocks are already thinly traded; cornerstone-heavy 
IPOs make the problem far worse. No wonder bankers are fed up. 
        
    Full view will be published shortly. 
     
    CONTEXT NEWS 
    - State-owned Postal Savings Bank of China is seen getting 
about $6 billion of its $8 billion Hong Kong initial public 
offering covered by commitments from cornerstone investors, 
Reuters reported on Aug. 24, citing people with direct knowledge 
of the deal. 
    - Cornerstone investors, who commit to invest a fixed dollar 
amount in an IPO and then hold their shares for at least six 
months, have played a major role in almost of all of the city's 
recent sizeable new issues. This year's roster includes BOC 
Aviation, China Development Bank Financial Leasing, China 
Zheshang Bank, and Bank of Tianjin.  
    - For previous columns by the author, Reuters customers can 
click on  WEBB/   
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
China's postal bank to get $6 bln in investor commitments for HK 
IPO-sources     urn:newsml:reuters.com:*:nL3N1B533X 
Hong Kong's cornerstone investors dominate but drain IPOs of 
vitality      urn:newsml:reuters.com:*:nL4N19D2AJ 
Recent Hong Kong IPOs rely more heavily on cornerstone investors 
     urn:newsml:reuters.com:*:nL4N19E1OJ 
BREAKINGVIEWS - Hong Kong's cornerstone problem goes postal    
 urn:newsml:reuters.com:*:nL3N1B618A 
BREAKINGVIEWS - CDB exposes Hong Kong's make-believe IPO market  
   urn:newsml:reuters.com:*:nL4N19Y18G 
BREAKINGVIEWS - Hong Kong IPO cornerstone habit is out of 
control     urn:newsml:reuters.com:*:nL4N19E1EA 
BREAKINGVIEWS - Hong Kong's IPO prowess is weaker than it looks  
   urn:newsml:reuters.com:*:nL3N13T1BI 
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 (On Twitter https://twitter.com/qtwebb Editing by Una Galani 
and Katrina Hamlin) 
 ((quentin.webb@thomsonreuters.com;)(Reuters 
Messaging:)(quentin.webb.thomsonreuters.com@reuters.net)) 
 
Keywords: HONG KONG IPO/BREAKINGVIEWS