Brilliance China Auto is a major supplier to global brands and has JV tieups with several foreign makes. Now it wants to seek global capital in Hong Kong.  Photo: Brilliance

Translated by Andrew Vanburen from a Chinese-language piece in Sinafinance

THE SIGN OF a club’s exclusivity is the barrier to entry.

The same could be said for a stock market, but bourse operators don’t always aim to limit membership at any cost.

In fact, letting in a handful at a time can really light a fire under investors if the mood is right.

That being said, 11 firms are planning to raise nearly 54 billion hkd on the Hong Kong Stock Exchange by the end of June.

But is the market ready?

Financial sector powerhouse Haitong Securities Co Ltd (HK: 6837) was the first to pry open the floodgates last week.

Mainland China’s second biggest brokerage went public on Friday, but investor reception was decidedly unenthusiastic as the Shanghai-based firm raised just 1.7 billion usd, quite a bit lower than expectations.

However, the proceeds were still enough to rank Haitong’s offer as the world’s biggest IPO in 2012 so far.

Hong Kong’s appeal to newcomers has been lagging of late with just 20 firms raising a little over two billion usd in the first three months of the year, down some 33% from year-earlier levels.

Market watchers point to the continued anxieties over debt and economic crises in the EU and the US, as well as slower-than-expected GDP figures coming from Mainland China recently, as the reasons behind the tapering off of firms flocking to Hong Kong’s capital market to raise money.

Nevertheless, despite the lack of a listing frenzy in the first quarter, Hong Kong has remained the top IPO market worldwide for the past 36 months.

Analysts expressed concern that the tepid reception investors gave to Haitong Securities last week could be repeated over the next few weeks as several more firms look to list in Hong Kong.

Gambling on Hong Kong: Japan's No.2 pachinko parlor operator Dynam is planning a Hong Kong IPO.  Photo: Dynam

Another Chinese firm on the cusp of going public in Hong Kong is car parts manufacturer Brilliance China Automotive Holdings Ltd (HK: 1114).

Brilliance, which also makes minibuses and sedans and has faced anti-dumping action in the European Union in the past, plans to raise up to 2.3 billion hkd in mid-May with underwriting help from Merrill Lynch.

The automaker has been running on high octane of late, nearly quadrupling its profit in 2010 to 78.2 million yuan.

Online auto retailer Yongda also plans to throw its hat into the Hong Kong ring in mid-May, targeting between 3.1 to 3.9 billion hkd.

Its virtual dealership engages in auto sales, service as well as a convenient and comprehensive stop for those in need of parts.

In addition, this Thursday will see two new listed enterprises in Hong Kong’s capital market.

Coal industry play Inner Mongolia Yitai Group is hoping to raise 11.7 billion hkd while London-based jeweler Graff Diamonds is targeting 7.8 billion hkd.

And continuing on the international theme, Japan’s No.2 pachinko parlor chain – Dynam – is planning to go public in the Special Administrative Region within the next two weeks.

Only time will tell whether Dynam’s Hong Kong gamble, or Brilliance China Auto’s drive will pay off.

See also:

BAD TIMING: Quality Scandal Halts China’s Laiyifen IPO

KISSING COUSINS: PRC Market Rise To Carry Hong Kong

SHOW ME THE MONEY: What Happens To SOE Profits In PRC?

China IPOs Putting Pressure On Large Caps

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