From The Financial Times:
The tide has turned on overseas Chinese initial public offerings, one of the last outposts of irrational euphoria open to foreigners. In the past week, two IPOs have tanked on their debut on the Hong Kong stock exchange: the latest, Sinotruk , slid 16 per cent on Wednesday, the worst first-day performance seen in the territory this year.
Coming at the end of a year marked by excesses – until November 20, such IPOs were returning an average one-day pop of 30 per cent, according to Dealogic – the latest arrivals herald a marked shift in sentiment. Not before time. Massive oversubscription rates allowed issuers to demand aggressive valuations, often flouting the conventional discount to benchmarks. Sinotrans Shipping, which flopped last week, was listed on a multiple roughly double that of its peers. Supply has also been gutsy: a handful of shipbuilders are all seeking to tap the markets within a few months of each other. The pipeline is bulging, with more than $3bn of issues due to come to market in the next few weeks. [Full Text]