Indiabulls falls to bear market

Indiabulls falls to bear market 

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UNITS in Indiabull Properties Investment Trust closed 10 per cent below their offer price on their debut yesterday, capping a miserable year-to-date for new listings.

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As of yesterday’s market close, 11 of the 14 new listings this year were trading below what investors paid when they subscribed to their initial public offerings (IPOs).

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“Investors are spooked,” said Mr Gabriel Yap, senior dealing director at DMG and Partners Securities. It does not help that some of the IPOs this year come from industries that are not considered appealing to investors.

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Indiabulls, which invests in office space in India, raised less in its listing than hoped after a lukewarm investor response, despite extending its offer deadline by a day to last Friday. Its units were priced during the IPO at the low-end of the projected range at $1 apiece but still closed on their debut at 90 cents, having touched 88 cents at one point in the day.

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The only three IPO debutantes still trading above their IPO prices this year are Catalist-listed Old Chang Kee and mainboard-listed Wee Hur Holdings and Yongmao Holdings. Sino Construction, whose offer has been fully subscribed, will be the next to test the waters when its shares make their market debut today.

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With the bleak global economic climate, investors are more cautious about parking their funds into new stocks.

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“Markets do not like uncertainty and there doesn’t seem to be any point at which markets can hinge to recover from the current slump,” said Mr Yap. “The uncertainty that first arose from the sub-prime crisis last year is further complicated by inflationary pressures from high oil and food prices.”

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Unless a new listing has a good theme and reasonable valuation, the experts say it is best to avoid investing in IPOs for now.

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In particular, the rising interest rate environment does not bode well for property trusts such as Indiabulls, if subscribers want to borrow funds to invest.

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“There is higher interest cost, which means less gain for unit holders,” said one dealer.

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The amount raised through the15 IPOs, including Sino Construction, :this year is $1.21 billion. This is less than half the $2.77 billion raised during the same period last year through 20 new listings. In particular, the shares of the listings of new foreign firms — :mostly from China and India — here have done badly.

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“Capital markets have always been in a volatile ‘feast and famine’ environment. Times are difficult now, but things willreturn to normal again,” said an analyst at a foreign bank. “People in the business know this is what we have to live with.”

 

Source: Today Newspaper

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