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Wednesday,November 22,2017
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China Railway Steams 27% in Hong Kong

Updated Beijing Time

Source: China Daily

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.

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.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. (By Lillian Liu and Amy Lam)

[More Hong Kong & Macau News]

Editor: Jessie Hwang

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