Hong Kong jewellery giant falls on trading debut

December 15, 2011 | 10:31

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Shares of Hong Kong-based Chow Tai Fook Jewellery Co. fell as much as 9 per cent on its trading debut on Thursday, after raising a lower-than-expected $2.0 billion amid volatile global markets.

The world's biggest jewellery chain opened at HK$14 ($1.80) and touched HK$13.68 in early trade, below its HK$15 per share initial public offering price. The benchmark Hang Seng Index was 1.22 per cent lower in early trade.

The sluggish market debut came after the firm, which has more than 1,500 outlets in Asia, priced its shares at the lower end of its HK$15-21 price range, raising less than the $2.8 billion it had originally hoped for.

It had said the institutional tranche of the IPO -- one of the biggest of the year in Hong Kong, the world's largest IPO market -- was "moderately oversubscribed" while the retail portion was about 6.62 times oversubscribed.

Chow Tai Fook, a household name in China but virtually unknown in the West, sees the listing as a way to capitalise on the growth in personal wealth in China, where demand for luxury goods is soaring.

The group has a large network of stores in China plus outlets in Macau, Malaysia, Singapore and Taiwan. It also has diamond-cutting facilities in South Africa and China, and manufacturing plants in China and Hong Kong.

It plans to increase its number of stores to more than 2,000 by 2016.

Chow Tai Fook is among the list of giants using Hong Kong as a gateway to tap the Chinese market, following the listing of firms such as Italian luxury fashion house Prada, US handbag maker Coach and luggage maker Samsonite.

Other branded companies looking at Hong Kong listing options include Aston Martin, Burberry, Ducati and Graff Diamonds.

China's deep capital pool helped Hong Kong to claim the title of the world's biggest IPO market for the second year in a row in 2010.

AFP

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