Roundup: MTRC Robust on Trading Debut

MTRC Robust on Trading Debut

The shares of the Hong Kong Mass Transit Railway Corp. (MTRC) rocketed on their debut Thursday as the market had expected, opening at 12 HK dollars and quickly rising to an early high of 13 HK dollars.

The stock slid slightly in later trading to close at 11.6 HK dollars, up 23.7 percent from its issue price of 9.38 HK dollars for institutional investors and 30.6 percent from the discount issue price of 8.88 HK dollars for retail investors.

The trading volume totaled a hefty 3 billion HK dollars (385 million U.S. dollars).

The initial public offering of the MTRC shares was described as "extraordinarily successful" by Hong Kong Financial Secretary Donald Tsang at the listing ceremony.

The first privatization of government assets in the Hong Kong Special Administrative Region (HKSAR) "paves the way for other possible government privatization in the future," said Tsang.

The Hong Kong International Airport will probably be the next government asset to be privatized.

"It offers the people of Hong Kong, who make over two million trips a day on the MTRC, the opportunity to become individual stakeholders in a successful corporation," he said.

Apart from the price discount, the retail investors also enjoy one loyalty bonus share for every 20 shares for holding the stock for one year and one for every 15 shares for holding the stock for two years.

"Privatization reinforces our commitment to a free market; underscores the reasons why Hong Kong is one of the world's freest economies; and sends a strong positive signal to the international community," Tsang said.

By offering 600 million shares to retail investors and 400 million shares to institutional ones, which combine to account for one-fifth of the company's stake, the government will raise about 9.08 billion HK dollars (1.16 billion U.S. dollars).

The Hong Kong government will continue to hold at least 51 percent of the company's stake.

Local public opinion pointed out that the huge earnings brought by the privatization of the MTRC to the government will help contain the budget deficit and ease the economic burden of the government, having a profound significance for the long-term stability and prosperity of Hong Kong.

The four-day initial public offering (IPO) of the MTRC shares launched on September 25 received overwhelming response despite a previous market depression.

A total of 618,000 Hong Kong people, more than one-tenth of the population, sent in applications, far exceeding the 440,000 for Tom.com backed by tycoon Li Ka-shing, and 180,000 for Tracker Fund, the government's blue-chip portfolio.

The government has decided to allot at least one lot, or 500 shares, to each retail investor who subscribed to the shares, given the subscription level of 29.6 times in the retail tranche.

Some market analysts estimated that the MTRC share price could hit 15.8 HK dollars per share, and its net asset value, within six months, 77.92 percent up from the retail issue price.

The Hong Kong stock market returned to the 16,000 territory Thursday, closing at 16,184.68 points, up 305.79 points, or 1.93 percent from Wednesday's close, and up 755.73 points, or 4.9 percent, from the close on September 25, the day when the MTRC IPO was launched.