Shares of Semiconductor Manufacturing International Corp. (SMIC) opened lower in their debut on Hong Kong's main board, only hours after falling on their New York Stock Exchange debut, dampening prospects for Chinese companies seeking to raise $23 billion in overseas share sales this year.
Overall, shares in SMIC dropped 11% in their New York debut and fell 7% in Hong Kong trading, with analysts suggesting that investors were cautious after the company said earlier this week that its chief financial officer made "inaccurate statements" about having sufficient capital to meet planned expenditures through 2005. Another cause for concern was SMIC's valuation–slightly higher than Taiwan chip maker United Microelectronics.
The world's fifth-largest maker of made-to-order chips, SMIC raised $1.8 billion in the world's third-largest initial public offering so far this year behind sales from Shinsei Bank and U.S. insurer Assurant Inc. Nevertheless, trading started poorly, despite insiders predicting a first day gain of up to 20%, considering retail investors subscribed for 272 times the shares available and committed $24.19 billion of funds. The company's Hong Kong-listed shares ended the morning session at HK$2.50, giving the firm a total market value of HK$45.5 billion. Turnover in SMIC stock was brisk at HK$1.8 billion, making it the second most actively-traded on the Hong Kong exchange. SMIC's American Depositary Shares closed at $15.50 in New York on Wednesday–11% below their IPO price of $17.50.