Shares in the China port unit of Hong Kong giant Hutchison Whampoa fell almost six percent on their debut in Singapore on Friday, hurt by the ongoing nuclear crisis in Japan. The initial public offering for Hutchison Port Holdings Trust, which controls deepwater ports in China and Hong Kong, has raised $5.5 billion, making it Southeast Asia's biggest and the world's largest so far this year.
But analysts had warned that its first trading session could be hurt by the ongoing nuclear crisis in Japan - triggered by a magnitude 9.0 earthquake and a tsunami - which has dented investor sentiment globally. The company closed at $0.950 a share on the Singapore Exchange (SGX), down 5.94 percent from its initial public offering (IPO) price of $1.01. It opened at $0.975.
The broader market also fell, shedding 0.24 percent, on a day when most of the region's markets rose on the back of strong sentiment caused by a G7 pledge to intervene jointly in financial markets to rein in the yen. The trust's parent Hutchison Whampoa is controlled by Hong Kong's richest man Li Ka-shing. Financial group CIMB warned in a note to clients that the firm could be hit as Japan is a major source of equipment.
"Japan is the major key components exporter in several fields, including electronics, optic media and machinery to manufacturing countries in the region. "Near-term supply chain disruptions could have a negative impact on trade volumes. This could hurt (Hutchison Port's) near-term earnings." And, predicting that the firm would end in negative territory, Ng Kian Teck, an investment analyst with SIAS Research in Singapore, told AFP: "I think it is fortunate they got the IPO funds raised before the Japan crisis." However, company executives were upbeat.
Canning Fok, chairman of the trustee manager of Hutchison Port Holdings Trust, told reporters at the listing ceremony: "Well, I think, consider the situation, this is excellent. "This is the best port you can find in anywhere in the world... I am very positive about the whole thing." The IPO was 2.9 times subscribed, with 3.8 billion units sold to institutional investors and the public.
"You have set the record as the first container port business trust to be listed publicly in the world and the $5.5 billion raised is the biggest IPO in Southeast Asia and the biggest IPO in the world in 2011 to date," said SGX chairman Chew Choon Seng. "The level of interest in the issue and the demand that has been generated in somewhat challenging market conditions testify to the quality of the assets in the trust and to the market's confidence in the board and management of the trust." The Singapore index has lost almost 3.50 percent over the past four days as global stocks tumbled amid growing concern after last Friday's earthquake and tsunami battered Japan and led to fears of a meltdown at a power plant north-east of Tokyo.