China Communications Construction cuts IPO size by 75%
Wednesday, 01 February 2012 | 11:00
China Communications Construction Company has become the latest firm to alter its share sale plans in the wake of volatile stock markets.
China's biggest port builder has cut the size of its Initial Public Offering (IPO) in Shanghai by 75%.
The state-owned firm is now looking to raise 5bn yuan ($791m; £502m), down from its initial target of 20bn yuan.
Chinese stock markets fell more than 20% last year forcing many firms to delay their proposed share sales.
The firm is already listed on the Hong Kong Stock Exchange. Its shares were down more than 5% on the Hang Seng index.
While stock market volatility has played a role, analysts said other factors may have also forced the company to rethink its strategy, including the availability of extra funding from other sources.
"It could mean they are getting more financing from within the Chinese banking system," Tony Nash of IHS told the BBC.
China reduced the reserve ratio requirement for banks to 21% from a record high of 21.5% in December last year, cutting the limit on the amount of cash the country's banks have to hold in reserve in a bid to encourage more lending.
At the same time, analysts said the threat of slowdown in the Chinese economy may have also played a part.
"They may have also brought down their expansion expectations based on the global economic situation," Mr Nash added.
The Chinese economy grew at its slowest pace in almost two years in the October to December quarter and analysts have warned that growth may slow further in the short term.
Source: BBC News
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