Market turmoil hurts Chinese machinery giants
IPOs abandoned as manufacturing shrinks for third month in row
Planned IPOs worth $4.5 billion by two of China's largest manufacturers have been hit by turmoil in the world's financial markets.
Sany, which was planning to raise $3.3 billion on the Hong Kong stock exchange, is now likely to wait until 2012 to issue its IPO following what it described as “short-term uncertainties" in the market.
“We aim to grasp an opportunity when the market turns relatively favourable,” Tang Xiuguo, president of Sany Group told reporters.
Investors have grown increasingly nervey in Hong Kong over the past year as only seven out of 51 IPOs have made money forcing many Chinese companies to re-think their cash-raising strategies. For instance, Sany's fellow manufacturer XCMG said last week that it has been forced to abandon its $1.1 billion share offering after underwriters would not commit to buying any unsold stock from the IPO.
While China remains the world's dominant market for imports and exports its exponential growth has slowed this year, with the government trying to keep a grip on inflation and over capacity from the manufacturing sector.
According to Bloomberg, Chinese manufacturing will shrink for the third time in three months in September, the longest contraction since 2009.
"The reading was below 50, the level that separates expansion from contraction in the eight months through March 2009, according to previously released figures," reported Bloomberg.
Tang said that despite delaying the IPO, the company will complete its roadshow to investors and plans to open its new plant in Georgia, USA.