Chinese insurer PICC rises on Hong Kong debut

Chinese insurer PICC rises on Hong Kong debut

The state-owned company opened up 3.16 percent at HK$3.59 ($0.46), compared with its offering price of HK$3.48. The stock surged as much as 7.76 percent to HK$3.75 in early trading amid a broadly positive market.

"I think the stock price today reflects the investors' expectation and confidence," PICC chairman Wu Yan told reporters after hitting the gong to mark the beginning of the firm's trade.

Wu called the listing a "milestone development" for the 63-year-old firm, a pioneer in China's insurance industry, which he said has transformed into one of the world's fastest-growing insurance companies today.

"The successful listing... also injects new energy into Hong Kong's equity market," he added at the listing ceremony, which was also attended by Hong Kong's finance minister John Tsang.

The Beijing-based People's Insurance Company of China's offering, the world's fifth largest this year, comes as Hong Kong has endured a slow year for initial public offerings (IPOs) owing to concerns about the outlook in China and globally.

Selling at the top end of its price range would have seen PICC, China's fourth largest insurer, raise up to $3.6 billion.

Analysts said there was nothing to cheer despite PICC's positive debut.

"I don't think it's a surprise," investment bank Core Pacific-Yamaichi research manager Olive Xia told AFP.

"The IPO price is relatively low and it was priced at the low end of the (HK$3.42-HK$4.03) price range so there are already upside potentials for the share price to rise after its debut."

The Shanghai-based analyst said the latest share sale is also unlikely to see the return of the once red-hot IPO market in Hong Kong, which was the world's biggest destination for new listings in the past three years.

"Major fundraising will be relatively low compared to previous years.

"But there are opportunities for companies in China still because the economy is still undergoing micro-restructuring, so companies in booming industry (would want) to raise fund in the Hong Kong market," Xia said.

Figures show Hong Kong has only raised about $10.16 billion from new listings so far this year, a plunge of 66 percent from the same period last year, according to data provider Dealogic, which tracks IPOs in major markets.

This placed the Hong Kong bourse as the fourth-largest IPO market this year, after New York, Nasdaq and the Tokyo stock exchanges, Dealogic data showed.

PICC has secured 17 so-called cornerstone investors ahead of its listing and has committed to investing a total of $1.82 billion.

These include the US-based insurance giant American International Group and China Life Insurance, China's biggest life insurer by premiums.

Cornerstone investors are given the option to buy vast portions of stock in an IPO if they agree to hold the shares for a certain amount of time.

PICC has said it intends to use the net proceeds from the share sale to strengthen "the company's capital base to support its business growth".

Founded in 1949, PICC was the first nationwide insurance company in China, which today has 130 million individual insurance customers and about 2.4 million institutional clients.

Source: http://news.malaysia.msn.com/top-stories/article.aspx?cp-documentid=251277801

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