On This Day|Cathay Pacific debuts on Hong Kong Stock Exchange in 1986 – SCMP archive

Turnover soars as Cathay takes off By Jerry Norton This article was first published on May 16, 1986 Cathay Pacific Airways had a memorable take-off in the stock market yesterday, accounting for a massive $446 million worth of turnover, more than the combined value of all other shares traded. The action in the rest of the market was strictly pedestrian, however, as the excitement over Cathay failed to spill over to other shares and the Hang Seng index dropped 27 points. In volume terms, 86.6 million Cathay shares changed hands in their trading debut, equivalent to more than 38 per cent of the 226 million shares offered to the general public last month. And Cathay’s $5.15 closing represented a hefty 33 per cent premium on the $3.88 offer price. However, the closing figure came as no surprise, since grey market prices ranging from $4.80 to $5.50 had been quoted over the last several weeks, and brokers had been forecasting the fresh trades yesterday would be in a $5 to $5.40 band. In the event, Cathay opened at $5.10 yesterday and had a high quote of $5.35. Brokers said nearly half of the Cathay trading came in the first half hour, largely reflecting grey market agreements, and that many of the day’s deals were done between $5.20 and $5.30. While in general that was around expectations, what some brokers said they had not anticipated was the relative narrowness of the price range, given the volume of the trading and the variation in the grey market quotes. The fact that the $5.15 finish was not at the higher end of forecasts could suggest those who expected the share to move rapidly toward $6 may be disappointed. With Cathay’s 55 times oversubscription having left many would-be buyers hungry for more shares, however, there were those analysts who doubted the major institutions had completely satisfied their appetites even with yesterday’s massive transfers. If they do continue to try to top up their long-term holdings, much will depend on whether locals whose main interest was a quick profit have now finished their stagging action. Swire Pacific and the Hongkong and Shanghai Bank had respectively earned some $1.7 billion and $695 million from the offer proceeds, and retained 54.25 per cent and 23.25 per cent of the company’s 2.65 billion shares. Placements gave Cheung Kong, Hutchison Whampoa and Hysan Development a total of 7.5 per cent of the shares, and other Hongkong institutions five per cent, while 1.5 per cent were reserved for Cathay staff, leaving 8.5 per cent for the general public. Bulls had hoped the first day excitement over Cathay would aid other shares, with those taking profits putting some of their funds elsewhere in the market. That proved far from the case yesterday, however, as most counters declined. That could reflect some disappointment Cathay’s price had not climbed higher. Cathay itself, meanwhile, could have some trouble maintaining altitude if the rest of the market continues to sag.