Extreme volatility and a 20% discount on a US$800m-plus block trade from a Chinese state fund have raised fears that recent share sales have exposed Hong Kong to the kind of trading patterns more often seen in the mainland's far less mature equity markets. The distressed share sale also offered a reminder of the risks investment banks take by providing share-backed financings to their Chinese clients at a time of major market volatility. In a week rich in dramatic developments, when Chinese shares first crashed and then rebounded after regulators orchestrated a rescue, the most eye-catching news from Hong Kong was a HK$6.33bn (US$816m) selldown by Haixia Capital, a state-owned Chinese investment fund, of its entire stake in haitong securities. The sale followed heavy selling of Chinese brokers in Hong Kong, with Haitong's stock sinking by a total 26% on Monday and Tuesday. Yet, after the close on Tuesday, UBS, acting as sole bookrunner, announced the placement of Haixia's stake at an indicative price range of HK$11.12-$12.00, a discount of 13.7%-20.0% to the pre-deal spot.
展开▼
