HONG KONG: BBMG, Beijing's largest cement maker, starts trading today after locking up $768 million in its Hong Kong initial public offering amid favorable stock sentiment. Analysts, though bullish on its trading debut, would not give as much of a thumb's up to the share's outlook in the long haul.

Separately, the company said it does not rule out the possibility of home-listing in the Shanghai Stock Exchange.

BBMG's shares are 773 times oversubscribed among over 400,000 investors, with a winning rate of 10 percent per lot (500 shares), making it one of the most popular IPOs in the history of Hong Kong's stock market.

BBMG was traded at HK$10.4 apiece in the grey market, 63 percent higher than its IPO price of HK$6.38, the top end of an indicative range, according to local media yesterday. The grey market trading is considered a barometer of a share's popularity.

The market therefore expects BBMG's price to jump 80 percent or even double on today's trading debut.

An earlier IPO, Amber Energy, whose shares were 1,248 times oversubscribed, surged as much as 80 percent on its trading debut when the benchmark Hang Seng Index was at 17,700 points on its climbing course.

A more favorable current indicator for BBMG is that the Hang Sang Index rose above 20,000 points and ended at 20,624 yesterday after four days of consecutive rise.

Another construction material provider, China Zhongwang, an aluminum producer listed in May, surged nearly 50 percent as of yesterday from its offering price after falling 5 percent on its first trading day when the Hang Seng Index just exceeded 16,000 points.

Analysts therefore are bullish about BBMG's trading start today in light of the buoyant stock market.

In the meantime, Hong Kong's central bank - the Hong Kong Monetary Authority - yesterday injected another HK$3.1 billion into the money market that is in dire need of Hong Kong dollars, suggesting sufficient, if not excessive liquidity in the equity market.

The central government's heavy spending on construction projects has triggered investor demand for construction-related shares, such as Hong Kong-listed Zhongwang and BBMG, according to Marco Mak, head of research at Taifook Securities, who added that Shanghai-listed Sichuan Expressway, whose price tripled on its first trading day could also be a favorable factor for BBMG's trading debut.

However, the analyst said he does not expect BBMG's price to keep climbing in the long run, as the company's businesses, including cement-making and property, do not distinguish it from its competitors.

(HK Edition 07/29/2009 page4)