Shares in China Railway Group, the world's third largest
construction contractor, soared 27 percent on its first trading day
in Hong Kong on Friday, as investors took a punt on the mainland's
transport system.
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The stock gained 30 percent to HK$7.50 before closing at HK$7.36,
higher than its offering price of HK$5.78. The company's Shanghai
shares surged 69 percent on their Shanghai Stock Exchange debut on
Monday. Its A share rose 1.08 percent to close at 8.44 yuan on
Friday.
By comparison, Sinotrans Shipping Ltd and Sinotruck (Hong Kong)
Ltd slid more than 10 percent in their Hong Kong trading debuts
last months, due to pessimistic market sentiment.
Analysts believe the mainland's transport sector is the most
resilient and is directly tied to the country's economic
development. The mainland will invest 5.05 trillion yuan on
transport systems by 2010.
"Transport is a key sector for any country's development. The
recently listed groups are well-performing companies with promising
development in the years to come," said Cho Fook-tat, senior
manager of Hong Kong-based securities consulting firm Taifook
Securities.
Cho said the transport stocks were hit by weak market sentiment
on their trading debuts.
The benchmark Hang Seng Index closed down 2.42 percent at
28842.47, as caution set in ahead of a US employment report.
China Railway will use the funds for equipment purchasing,
capacity expansion and technology upgrades, as well as investment
in new railways, roads and subways, the company said in a
statement.
Its initial public offering in Shanghai early this week was one
of the world's largest by an engineering and construction
company.
China Railway's Hong Kong shares traded at 44 times earnings,
compared with 74 times for Beijing-based China Communications
Construction Co, the world's largest builder of ports.
China Railway raised HK$19.22 billion in the Hong Kong share
sale, and raised 22.4 billion yuan in its Shanghai offering.
The mainland, with 78,000 km of rail, has the world's
third-biggest network after the US and Russia. Its projected
spending on railways in the five years to 2010 is more than triple
that of the previous five, according to the share-sale
documents.
(China Daily December 8, 2007)
