HK has appetite for Chinese takeaway

HONG Kong investors once again demonstrated their apparently limitless appetite for public share offerings in mainland companies today, driving up China Oriental Group 30% on its market debut.

The retail portion of the steelmaker's $247m (£133m) initial public offering was 719 times oversubscribed.

The shares were trading at HK$3.57 shortly after the opening against an offer price of HK$2.75, but later eased to HK$3.48.

While it seems investors will back anything with exposure to China, prospects for the mainland's steel industry make the sector a good bet. China uses about 25% of the world's steel products and demand is expected to rise a further 15% this year.

The float came on the same day as Australian government economists predicted that iron ore demand would soar nearly 12% - mainly due to China.

China Oriental, which supplies steel billets and strips for downstream manufacturers, forecasts a net profit of at least one billion yuan (£65m) for the year just ended, 158% more than a year before.

While investors were prepared to back that growth, they were more demanding about global bank HSBC, where a 33% rise in pre-tax profit was not enough to boost the share price. It was down 0.78% at HK$126.50 and its smaller subsidiary, Hang Seng, was off 2.75% at HK$106 as investors had expected an even better result.

The Hang Seng index fell 47.84 points, or 0.3%, to 13,870.81.

In Tokyo, the big news was the $1.14bn (£611m) loan that Softbank, the country's largest provider of broadband internet access, has arranged through its US unit with Citibank.

The company plans to use the cash for general business development and will repay it using Yahoo! stock it is going to buy for that purpose. After some initial concern, investors approved the strategy and the shares rose 0.7% to 4320 yen.

The Nikkei closed up 90.39 points, or 0.8%, at 11,361.51, with construction the star performer - Tokyu Construction rose 11.67% to 1196 yen.

Sydney investors turned their attention to resources stocks.

These have taken a battering in recent months as the rising Aussie dollar erodes earnings, generally denominated in US dollars. But demand from China to stoke its booming economy, has shifted focus. With the market expected to grow at nearly 12% in the next 12 months, the strong local currency could not dampen enthusiasm.

Rio Tinto was up 1.2% at A$36.69 and BHP Billiton, with its timely US$9bn sales agreement with four Chinese mills, rose 2% to A$12.68.

The big banks also performed well on expectations that the Reserve Bank, which began a two-day meeting today, will keep interest rates unchanged. National Australia Bank continued yesterday's gains with a 0.23% rise to A$31.07, ANZ was up 0.6% at A$18.13 and Westpac rose 0.35% to A$17.03. The All Ordinaries index advanced 8.3 points, or 0.2%, to 3398.2.

In Singapore, the key Straits Times index was up 4.54 points, or 0.2%, at 1896.27.

Among blue-chips, Singapore Telecom was up 2.15% at S$2.38, but Singapore Airlines was down 0.85% at S$11.70 and Singapore Press off 0.5% at S$18.70.

Shipping company Neptune Oriental made early gains on buoyant projections of further rises in freight rates, already up 16% this year. The shares later fell 0.48% to S$2.08.