Money

Sky-mobi and Bona Film tumble after IPOs

By Lee Spears (China Daily)
Updated: 2010-12-13 10:08

NEW YORK - China's Sky-mobi Ltd and Bona Film Group Ltd posted the biggest first-day declines since 2007 in US trading following their initial public offerings (IPOs) last week, renewing a slump in IPOs by mainland companies.

Sky-mobi, the operator of China's largest mobile application store by sales, slid 25 percent in Nasdaq Stock Market trading on Friday. Bona Film, the country's biggest privately-owned film distributor, fell 22 percent a day earlier. Those were the steepest first-day retreats on New York exchanges since Beijing-based Agria Corp sank 27 percent on Nov 7, 2007, according to Bloomberg data.

While Beijing-based online companies Youku.com Inc and E-Commerce China Dangdang Inc surged after their IPOs last week, six other mainland companies that completed sales from Nov 17 have retreated after the government raised interest rates and said that it may impose price controls to combat inflation, Bloomberg records show.

"The chance that they can engineer a soft landing seems kind of sketchy," said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. "You can pretty much sell virtually any US investor on the China growth story. It's just a matter of what you're willing to pay for it."

Related readings:  Chinese tech companies soar in US debut  China's Bona film group issues IPO on NASDAQ  Redbaby, Uni-Power to go public in 2011  Web firms' IPOs earn big bucks

Sky-mobi, based in Hangzhou in Zhejiang province, sold 7.25 million American depositary receipts (ADRs) for $8 apiece last week after offering them for as much as $10 each, according to its filing with the US Securities and Exchange Commission and a company statement. The offering pushed the number of initial sales by mainland companies past the record of 37 in 2007, according to Bloomberg data.

Bona Film of Beijing sold 11.7 million ADRs for $8.50 each on Dec 8 after offering them for $7 to $9.

While four of the 10 best performing US IPOs of 2010 have come from China, Youku.com and China Dangdang were the only ones to post gains of more than 5 percent since the government said on Nov 17 that it may impose price controls. China had already raised interest rates in October to combat the fastest inflation in two years. Youku.com, the nation's largest online video company, jumped 161 percent on Dec 8, the steepest gain for a US IPO since Beijing-based Baidu Inc five years ago. China Dangdang, the country's biggest Internet book retailer, surged 87 percent the same day.

China had an estimated 420 million Internet users at the end of June, according to data from the government-sponsored China Internet Network Information Center.

Bloomberg News