Airport bonds poised to take off

Investors look set to flock to the Hong Kong Airport Authority retail bonds when bookbuilding starts today, especially after the initial public offerings performed disappointingly.

With an annual interest rate of 4.25 percent, this batch looks attractive for locking in the high interest incomes in the coming 2-1/2 years with investors betting the global interest rates will start decreasing following US Federal Reserve action this year.

Aiming to raise up to HK$5 billion, the Airport Authority plans to use the proceeds on its third runway project.

Many brokerages, including Futu Securities, recommend investors subscribe to about five board lots and hold them no matter whether prices rise or fall.

The subscription will close on January 25 and the bonds will be listed on February 6 on the Hong Kong Stock Exchange.

Meanwhile, two companies that went public a year ago slumped amid the fear of stake cuts by major shareholders.

Shenzhen Pagoda Industrial (2411) plunged 35 percent at one point after the lock-up period expired. But the company said operations were normal.

Pagoda, China's largest fruit retailer, was listed on January 16 last year at HK$5.6 per share.

And YH Entertainment (2306) slumped as much as 80 percent at one time. The one-year lock-up period will expire this week.

As China's largest artist management firm, YH Entertainment went public on January 19 of last year at HK$4.08 per share.