Prada makes lacklustre Hong Kong debut

Italian luxury fashion house Prada made a lacklustre stock market debut in Hong Kong Friday amid choppy global markets and waning investor interest after a string of blockbuster IPOs. The family-controlled firm's stock opened just 0.25 percent higher at HK$39.60 ($5.08) compared to its initial public offering (IPO) price of HK$39.50, before it ended the morning session at HK$39.55. Hong Kong's benchmark Hang Seng index rose 1.42 percent at noon. The Milan-based company nevertheless trumpeted its listing debut in Hong Kong -- increasingly a favoured gateway for foreign companies trying to tap Chinese capital. "We are the first Italian luxury brand company to list here and this is a landmark event for the Hong Kong stock exchange," chief executive Patrizio Bertelli said. "I am positive the Greater China market will be an interesting market for luxury good brands. The first signs are very good," he told reporters. Ronald Arculli, chairman of the Hong Kong stock exchange lauded the listing as a "good start" for Prada and said the exchange was doing its best to attract quality companies to list in the city, despite volatile global markets. The Italian group, which includes the Prada, Miu Miu, Church's and Car Shoe brands, is the latest high-end fashion brand to tap the huge Chinese market, the world's fastest-growing market for luxury goods. China is forecast to be the world's top buyer of products such as cosmetics, handbags, watches, shoes and clothes by 2015, according to consultancy PriceWaterhouseCoopers. But weak market sentiment had pushed Prada to price its Hong Kong shares at the lower end of its price range and shrink the size of its highly anticipated IPO, raising a lower-than-expected $2.14 billion. Prada sold 423.2 million shares after floating 20 percent of its stock. Before the IPO, the brand had been 95 percent owned by the Prada family and executives. The top end of Prada's price range would have seen the firm raise about $2.6 billion in Hong Kong, before any option to issue extra shares which could have pushed the deal to $3.0 billion in all. Analysts said many investors were concerned that Prada's stock was overpriced, and were deterred by a tax hurdle in Italy that could shrink foreigners' profit owing to the absence of a tax treaty with Hong Kong. "We expected a three-five percent drop in share price for Prada, so this is already a good performance for them," Ben Kwong, chief operating officer of financial services group KGI Asia told AFP. "The weak market sentiment may have negatively affected investors' interest, and they are not as willing to pay a premium price," he added China's deep capital pool helped Hong Kong claim the title of the world's biggest IPO market in 2010 -- for the second year in a row. Firms raised more than $50 billion in Hong Kong IPOs last year, including two monster sales by Asian insurer AIA and Agricultural Bank of China. But at a time of unease in markets around the world, some firms have now decided to delay or cancel their listings in Hong Kong. Earlier this month, Australian miner Resourcehouse shelved an IPO originally slated to raise as much as $3.6 billion, citing weak market conditions. Luggage maker Samsonite had a poor trading debut in Hong Kong last week with its shares closing nearly eight percent below their IPO price. Outside the stock exchange, Prada received some unwanted publicity when two dozen women's activists staged a noisy protest accusing the group of sexual discrimination and chanted "Only the devil wears Prada! Shame on Prada!" The protest stemmed from the case of Rina Bovrisse, a 37-year-old former Prada manager in Japan who claimed she was unfairly fired in March last year after being told by a company executive that she was "ugly" and didn't have "the Prada look".