Hai Xing Shipping Company Ipo Case Study
FINA 6040E
Investment Analysis and Portfolio Management
Case Study
Shanghai Hai Xing Shipping Company
Andrew Fung (1009010180)
Yiu Tsz Yan Brenda (1155009775)
Gavin Niu
Lam Yung Wai Matthew (1155009776)
“H” Shares in 1993-1994
In the 1990’s, there was around 100,000 state owned enterprises (SOE) in China and over half of them were losing money. Since 1992, most of the SOEs were given freedom to reform and extensive new investment was required for the action. IPO is one of the effective channels to raise capital in the market. Beside the Shanghai Stock Exchange and the Shenzhen Stock Exchange, SOE also sought listing out of the PRC and Hong Kong became their first destination.
In 1993, 5 “H” Shares were listed in HKEx and it is very popular among the investors. The performance of the “H” shares in 1993 is very promising. The Hang Seng China Enterprises Index (HSCEI) earned a return of 112.6% which is 42% higher than the Hang Seng Index (HS).
|IPO Company |Subscriptions |Share price of the first trading day |
|Tsingtao Brewery |Over subscripted 110.5 times |Up by 29% from the IPO price |
|Kunming Machine |Oversubscribed 627 times |Up by 193% from the IPO price |
Table 1: “H” Shares listed in HKEx in 1993
However, the situation has dramatically changed in 1994. Investors start to concern the poor quality of the China companies and the China’s credit tightening policies. The HSCEI dropped by around 35% while the HS dropped by less than 10%. “H” Shares became much less popular to the investors. Compare to the “H” Shares listed in 1993, the Luoyang Glass IPO in July 1994 was only oversubscribed by 2%.
| |Tsingtao |Beiren Printing |Maanshan Irong & |Luoyang Glass |Qlngling
Investment Analysis and Portfolio Management
Case Study
Shanghai Hai Xing Shipping Company
Andrew Fung (1009010180)
Yiu Tsz Yan Brenda (1155009775)
Gavin Niu
Lam Yung Wai Matthew (1155009776)
“H” Shares in 1993-1994
In the 1990’s, there was around 100,000 state owned enterprises (SOE) in China and over half of them were losing money. Since 1992, most of the SOEs were given freedom to reform and extensive new investment was required for the action. IPO is one of the effective channels to raise capital in the market. Beside the Shanghai Stock Exchange and the Shenzhen Stock Exchange, SOE also sought listing out of the PRC and Hong Kong became their first destination.
In 1993, 5 “H” Shares were listed in HKEx and it is very popular among the investors. The performance of the “H” shares in 1993 is very promising. The Hang Seng China Enterprises Index (HSCEI) earned a return of 112.6% which is 42% higher than the Hang Seng Index (HS).
|IPO Company |Subscriptions |Share price of the first trading day |
|Tsingtao Brewery |Over subscripted 110.5 times |Up by 29% from the IPO price |
|Kunming Machine |Oversubscribed 627 times |Up by 193% from the IPO price |
Table 1: “H” Shares listed in HKEx in 1993
However, the situation has dramatically changed in 1994. Investors start to concern the poor quality of the China companies and the China’s credit tightening policies. The HSCEI dropped by around 35% while the HS dropped by less than 10%. “H” Shares became much less popular to the investors. Compare to the “H” Shares listed in 1993, the Luoyang Glass IPO in July 1994 was only oversubscribed by 2%.
| |Tsingtao |Beiren Printing |Maanshan Irong & |Luoyang Glass |Qlngling