percent on their trading debut on Friday, ahead of market
expectations, as investors piled into Hong Kong's biggest initial
public offering.
The successful listing brings an end to bailed-out insurer American
International Group Inc's two-year effort to sell its Asian life
insurance business, including a failed takeover attempt from British
insurer Prudential Plc .
Investors are betting that AIA's $34 billion-plus market
capitalization will push the stock into major stock indexes, including
Hong Kong's benchmark Hang Seng Index <.HSI>, generating demand from
funds for benchmarking purposes. CLSA estimates AIA to have a 5
percent weighting on the Hong Kong index.
"It's the prospect of joining major indexes that is aiding upward
momentum, otherwise its earnings growth prospects are not particularly
exciting," said Patrick Yiu, a director at CASH Asset Management.
AIA, which operates life insurance businesses across 15 Asian markets,
was offloaded by AIG to repay part of the financial aid it received
from the U.S. government.
By 0217 GMT, AIA shares were at HK$21.85 compared with its IPO price
of HK$19.68, after trading as high as HK$22.25. A Reuters poll had
forecast the shares to start trading at
HK$21.79.
While the life insurance business is poised for strong growth in Asia,
some of AIA's big markets are mature, which is a concern for some
investors.
"We still have to see how it performs in emerging markets, especially
India and China," Yiu said.
AIA's IPO was closed two days ahead of schedule after being swamped by
orders from Chinese investors and traditional long-only funds. AIG
raised $17.8 billion after selling shares at the top end of the
indicative range. The offer was subscribed to 9.62 times.
Life insurance premiums in Asia are projected to grow at compounded
annual rate of 12.3 percent between 2009 and 2014, compared with 2.5
percent in Europe and 4.4 percent in North America, according to Sigma
Swiss Re estimates.
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