Hong Kong Economic Times 2008/03/11
Qiu Shiwen

Employing a phased issuance of stock, the mainland offering of China Railway Construction Corp A-shares closed 28% higher than their initial public offering price on debut yesterday (March 10th), the lowest first day gain of any mainland stock issue in a year. Markets anticipate a 30% valuation gap between the mainland float and H-share release this Thursday in Hong Kong.

At the Shanghai Stock Exchange yesterday 1.96 billion China Railway Construction A-shares were traded, opening at 11RMB and closing at 11.64RMB, 28.19% higher than its initial public offering price of 9.08 RMB but still 30% below market forecasts. China Railway Construction is employing a phased float strategy that includes a 3.12 trillion RMB cap on A-share initial public offer purchases.

Securities Times analysts believe China Railway Construction A-shares underperformed consensus forecasts primarily due to a large drop in US stocks which caused a slide in the mainland share market. Low market volume and activity disproportionately suppressed China Railway Construction’s large-cap stock. On this ocasion, the rather high issue price also dampened investor enthusiasm.

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