Mainland IPOs Often Sap Gains

FROM telecommunications providers to coal miners, some of the biggest companies operating in mainland China plan to offer shares on the Shanghai Stock Exchange next year.

That could present investors in the Hong Kong market with an indirect but compelling opportunity -- if they time it right.

Telecom giant China Mobile, computer maker Lenovo Group and energy concern Cnooc -- three of the biggest and best-known 'red chips,' or nonmainland-registered companies -- are all gearing up for follow-on listings in Shanghai. Then there is a long line of mainland-incorporated companies eager to tap Chinese investors' thirst for share offerings, including Zijin Mining, China Coal, Guangzhou R&F, Great Wall Motor, China Telecom, China Netcom and People's Insurance Company of China.

The opportunity? These mainland listings could boost the companies' Class-H shares, or shares of mainland-registered companies that trade in Hong Kong.

Typically, issuing yuan-denominated Class-A shares, available mostly to mainland investors, provides a sort of value target for the H-shares. A-shares fetch premiums of about 45% to their Hong Kong counterparts according to ABN Amro. The premiums stem from China's capital controls, which trap a lot of stock-investing liquidity within the Shanghai and Shenzhen markets. A follow-on mainland Chinese listing also can boost H-share performance simply by increasing the company's buzz in the run-up to the Shanghai or Shenzhen debut.

And the timing? As blockbuster companies prepare to make their A-share splashes, H-share investors shouldn't necessarily expect the party to continue well into next year.

'The Hong Kong-listed shares of companies that completed A-share listings typically outperform the market in the period prior to the IPO date, while post-IPO performance is less consistent,' Jing Ulrich, J.P. Morgan's managing director for China equities, wrote in a year-end research note to investors.

Just look at the eye-popping gains that oil and gas giant PetroChina netted on its first day of trading in Shanghai last month. Though PetroChina's A-shares shot up 163% that day, Nov. 5, to send the company's market capitalization above the US$1 trillion mark by one measure, its Hong Kong-listed H-shares plunged 8.2% and were down 22% in a matter of weeks, before rebounding modestly. In Shanghai, the stock is faring worse, down 28% Friday to 31.31 yuan (US$4.23), from its opening day close of 43.96 yuan. Such stumbles out of the gate are teaching investors a lesson about companies' A-share listing plans: watch the Hong Kong stock price before the Shanghai debut.

'People have become smarter,' says Lan Xue, China strategist at Citi Investment Research. 'Just listing in Shanghai is not going to automatically mean strong H-share performance.'

The run-up to that Shanghai listing, though -- that's been no problem. Take PetroChina again: Its H-shares shot up 76% in the three months before the mainland debut, from HK$11.16 (US$1.43) to HK$19.60 on the eve of the Shanghai listing. That far outstrips even the benchmark Hang Seng Index's growth spurt to a record level during that stretch.

The same overall arc can be seen in other companies, many of whose H-shares have shot up in anticipation of the domestic listing, only to have those gains evaporate afterward. The H-shares of China Shenhua Energy were up 86% in the three-month lead to the company's Oct. 9 listing in Shanghai, peaking at HK$57.85 before plunging 30% in the next six weeks, bottoming out at HK$40.50. China Life Insurance, which saw its H-shares rise 73% in the three-month run-up to a Jan. 9 A-share listing, peaked at HK$26.85 before tailing off to settle around HK$22.80 three months later.

Companies often seek follow-on listings during a high-growth phase, when they are hungry for more capital to expand operations, suggesting their good fortune, good buzz and share-price growth can continue. But some just can't sustain their H-share prices even after the fresh infusion of mainland Chinese cash.

Ms. Xue of Citi says companies going to the equity market again with no obvious need for new funds enjoy 'little support' for their H-share prices in the aftermath of the follow-on listing. 'What we've found is that those companies who use the money productively see continued performance,' Ms. Xue says. 'Otherwise, what we see is that these companies underperform.'

So, as more and more Hong Kong-listed Chinese companies line up to list up north -- and H-shares continue to stumble in the wake of the Shanghai listings -- investors need to ask: Why does this company want to list in Shanghai, and will the listing create more value?

Many of the companies seeking a Shanghai listing really do need fresh funds to fuel expansion. David Cui, head of China equity research and strategy with Merrill Lynch in Shanghai, highlights oil and gas players as well as property developers, who are under pressure to snap up increasingly scare prime real estate.

'Most companies need the financing, and you can't get equity any cheaper elsewhere,' Mr. Cui says.

Still, part of the reason for a mainland follow-on, especially for the big state-controlled companies, may be political, even though Chinese securities regulators say they don't actively encourage companies to list domestically.

'The Chinese government wants to build a strong market, and these companies are under pressure to return home,' Mr. Cui says.

从电信运营商到煤炭生产企业，中国大陆的一些大型公司正计划明年在上海证交所上市。

这可能会为香港股市的投资者带来间接但极具吸引力的机会──如果他们能把握好时机的话。

电信运营巨头中国移动有限公司(China Mobile Ltd.)、电脑生产商联想集团有限公司(Lenovo Group Ltd.)和能源巨擎中国海洋石油有限公司(CNOOC Ltd.)这三家最大、最知名的“红筹公司”都在加快在沪上市的步伐。除此之外，还有一大批在大陆注册的“H股公司”也渴望从中国投资者对股票发售的大量需求中获利，这些公司包括紫金矿业集团股份有限公司(Zijin Mining Group Co. Ltd.)、中国中煤能源股份有限公司(China Coal Energy Co. Ltd.)、广州富力地产股份有限公司(Guangzhou R&F Properties Co. Ltd.)、长城汽车股份有限公司(Great Wall Motor Co. Ltd.)、中国电信股份有限公司(China Telecom Corp. Ltd.)、中国网通集团（香港）有限公司(China Netcom Group Corp. (Hong Kong) Ltd.)和中国人民财产保险股份有限公司(PICC Property & Casualty Co. Ltd.)。

机会在哪里呢？在大陆上市能刺激这些公司的H股价格上涨。H股为大陆注册公司在香港股市发行的股票。

通常情况下，主要面向大陆投资者发行的A股可以在某种程度上为H股提供一种“价值目标”。根据荷兰银行(ABN AMRO Bank)的数据，A股较相应H股的溢价约为45%。这种溢价来源于中国的资本控制，这种控制造成大量股市流动性集中在沪深股市中。继香港上市后在大陆上市，仅仅是为在沪、深上市而造出的声势就能刺激H股上涨。

如何把握时机呢？大型公司目前正纷纷准备在大陆上市，但H股投资者却不应理所当然地认为这种良好的态势会持续到明年。

摩根大通公司(JPMorgan Chase & Co)的中国证券市场部总监李晶在一份给投资者的年终研究报告中指出，A股上市公司在香港上市的股票在A股首次公开募股(IPO)前常能强于大盘，而在IPO之后股价却往往无法继续维持良好走势。

这可以从11月5日油气巨头中国石油天然气股份有限公司(Petrochina Co. Ltd.)在上海证交所首日上市令人瞠目的大涨中窥见一斑。虽然中国石油A股价格当日上涨了163%，公司的市值也在此推动下突破了1万亿美元大关，但是该公司H股价格却在当日下跌了8.2%，并在之后的短短几周中累计下跌了22%，之后才又温和反弹。该公司在上海股市上的表现更糟，上周五收于人民币31.31元（合4.23美元），较上市首日人民币43.96元的收盘价下跌了28%。这种股票的大幅下跌在公司A股上市计划方面给投资者们上了一课：要密切注意公司在沪上市前其香港股票的价格。

花旗投资研究(Citi Investment Research.)的中国部门负责人Lan Xue说，人们变得更聪明了，在沪上市并不一定意味着强劲的H股价格。

不过为在沪上市作准备的那段时间，H股价格上涨是毫无疑问的。还是以中国石油为例：在沪上市前的3个月中，该公司H股价格从11.16港元（合1.43美元）涨至19.60港元，上涨76%，涨幅大大超过了恒生指数的同期涨幅。而该指数正是在这段时间内攀升至历史最高水平。

其他公司的H股也出现了这种先涨后跌的“弓形曲线”走势，很多公司的H股价格会在其A股上市前大幅上涨，而在之后又几乎下跌到原有水平。中国神华能源股份有限公司 (China Shenhua Energy Co. Ltd.)在10月9日于上海上市前的3个月中其H股价格累计上涨了86%，达到57.85港元的最高点，而在之后的6周中却暴跌至40.50港元，下跌了30%。中国人寿保险股份有限公司(China Life Insurance Co. Ltd.)在1月9日于大陆上市前的3个月中其H股价格累计上涨了73%，达到26.85港元的最高点，而在之后的3个月中却逐渐下跌至22.80港元。

当公司处于高增长期时，它们急需更多的资金来扩大业务规模，因此常常会在香港上市后紧接着在大陆上市，以显示它们良好的前景、浩大的声势以及股价上涨都能持续下去。但有些公司注入其在大陆股市募集的资金后却无法使其H股价格继续保持在高水平。

花旗集团的Lan Xue说，那些不是非常需要新的资金注入、却在香港上市之后又在大陆上市的公司其H股价格在A股上市后几乎没有受益。她说，他们发现那些有效利用资金的公司能获得持续性增长；否则，公司股票会弱于大盘。

因此随着越来越多在香港上市的中国公司纷纷在大陆上市，而H股价格则在A股上市后不断下跌，投资者们需要问这样一个问题：这些公司为什么要在上海上市，这会为公司带来更多的价值吗？

很多在上海上市的公司确实需要新的资金注入用于扩大规模。美林公司(Merrill Lynch & Co.)中国股市研究及战略部门驻上海的负责人David Cui特别提到了油气公司以及房地产开发商，这些房地产开发商在获取日益稀缺的黄金地块方面面临着激烈竞争。

David Cui说，大部分公司都需要藉此融资，在其他地方你无法获得更便宜的股权资本。

尽管如此，在香港上市后随之在大陆上市可能也存在政治理由，对大型国有控股公司而言尤其如此，虽然中国证券监管机构称它们并没有积极鼓励企业在内地上市。

David Cui说，中国政府希望建立一个强大的市场，所以这些公司迫于压力而在大陆上市。

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