August 15, 2022

Setbacks for Samsonite and Prada I.P.O.’s in Hong Kong

Prada, the Italian luxury fashion house, lowered the price guidance for its listing in Hong Kong amid feeble demand from retail investors, a person with direct knowledge of the matter said Thursday.

And shares in Samsonite, the luggage maker that was founded in the United States 101 years ago, fell sharply on their first trading day in Hong Kong, becoming the latest in a string of global offerings to see a poor market debut.

Meanwhile, widespread selling across the Asia-Pacific region sent several key stock indexes down by more than 1.5 percent.

The global market sell-off had started on Wednesday, as protests and an imminent cabinet reshuffle in Athens once again fueled fears that Greece’s debt crisis would escalate and spread. On Wall Street, the Dow Jones industrial average fell 1.5 percent on Wednesday.

Asian markets followed suit on Thursday, with a 1.9 percent drop in Australia and South Korea. The Hang Seng in Hong Kong declined 1.8 percent.

The Nikkei 225 in Japan sagged 1.7 percent, the Taiex in Taiwan dropped 2 percent and stocks in mainland China fell 1.5 percent.

“There has been a complete loss of confidence,” said Francis Lun, managing director at Lyncean Holdings in Hong Kong. “With Greece on the verge of default, there are now fears that there will be a wider financial crisis.”

Greece’s woes and worries about the momentum of the global recovery have been weighing on financial markets for months.

In many of the fast-growing emerging nations, inflation pressures and rising interest rates are adding to investor nervousness. On Thursday, India raised its key interest rate for the 10th time since early last year.

Likewise, the authorities in mainland China have been reining in bank lending for the past 18 months, as well as raising interest rates. Another rate increase is widely expected to come within weeks as Beijing continues its battle to contain inflation.

“Liquidity is being squeezed by the government’s determination to bring down property prices and tighten rates,” Mr. Lun said.

Stock markets in the Asia-Pacific have performed poorly this year as a result. Most key indexes in the region are now below where they began the year, and several stock market debuts have performed poorly. Some companies have even shelved their public offerings as a result.

The weak market sentiment on Thursday prompted Prada, whose high-end handbags and apparel are popular with Asia’s increasingly affluent shoppers, to lower its price range to between 39.50 and 42.25 dollars, from a previously announced range of 36.50 to 48 dollars, according to a person with direct knowledge of the listing, who spoke anonymously because the information was not yet public.

A price at the upper end of the lowered range would bring Prada $2.3 billion, from the previous maximum of $2.6 billion. Prada is due to price its shares on Friday and start listing on the Hong Kong exchange on June 24.

Meanwhile, shares in Samsonite, which had been only moderately oversubscribed, dropped as much as 10.6 percent early in the day. Although they clawed back some of those losses later on, the shares were well below the issue price of 14.5 Hong Kong dollars, or $1.86, by late afternoon, closing at 13.38 dollars, down 7.7 percent.

Samsonite, which was bought by the British private equity firm CVC Capital Partners in 2007, had previously been forced to price its shares at the lower end of its indicative range, bringing it proceeds of $1.25 billion, rather than the maximum $1.5 billion it had hoped for.

Still, the decisions by companies like Samsonite and Prada to seek a listing in the Asian financial hub, rather than on an exchange closer to home, reflect an the overall shift in the center of economic and financial gravity toward fast-growing countries in Asia.

About a dozen non-Asian companies are aiming to list in Hong Kong this year in a bid to tap a cash-rich investor base and to raise their visibility in what is a key market for their goods.

“We feel at home here,” said Tim Parker, the Samsonite chief executive, amid a clatter of camera shutters at a listing ceremony at the Hong Kong stock exchange on Thursday, adding that the company planned to build its business in China, India and other parts of Asia.

Article source: http://feeds.nytimes.com/click.phdo?i=aa197a916774e45665f02358c06e072b

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