Dec. 3 (Bloomberg) -- Xiashun Holdings Ltd., China's largest maker of aluminum foil used for food and drink packages, canceled a HK$2.1 billion ($270 million) Hong Kong stock sale after the city's key index had its worst month since March 2004.

Xiashun pulled the IPO because of ``market conditions,'' a person familiar with the sale said, declining to be identified as no announcement has been made. Yau Sukyi, an outside spokeswoman for the company, confirmed that the sale has been ``postponed,'' without commenting on whether the company will sell the shares later.

The Fujian-based company became the first since June 2006 to cancel an IPO in Hong Kong because of declining interest from buyers. Its decision came after the Hang Seng Index dropped 8.6 percent last month, and as shares of six of the nine companies that completed IPOs in November trade below their offer price according to data compiled by Bloomberg.

``We are coming to the end of the year, and people are less inclined to take part in any IPOs unless they're really attractive,'' said Andrew Clarke, a sales trader at SG Securities (Hong Kong) Ltd. ``Basically you need a really attractive price or a really attractive stock or idea.''

JPMorgan Chase & Co. and UBS AG managed the IPO. Chris Cockerill, a spokesman at UBS, declined to comment, as did JPMorgan spokeswoman Marie Cheung.

Xiashun kicked off the IPO last week by offering 25 percent of the shares on sale to institutional investors. It planned to start trading in Hong Kong on Dec. 18.

Dropping on Debut

Sinotruk (Hong Kong) Ltd., China's largest maker of heavy trucks, plunged 16 percent on its first day of trading on Nov. 28. Five days earlier, Sinotrans Shipping Ltd. tumbled 13 percent on its debut in the city.

Weakening demand for new equities has prevented at least one company from raising the maximum sought in the past week. Dongyue Group Ltd., China's largest maker of chemicals used for refrigeration and air conditioning, priced shares on sale in a HK$1.12 billion IPO close to the low end of a marketed price range, people familiar with the matter said Nov. 30.

Xiashun's pulled IPO may also cast a pall on offerings planned by companies including Anton Oilfield Services Group, BYD Electronic (International) Co. and Bio Beauty Group Ltd.

IPOs were priced at ``unrealistically high and opportunistic'' levels in November, after the Hang Seng closed at a record on Oct. 30 amid expectations that China would soon let individuals invest in the city's market, said Andrew Sullivan, head of Asia sales trading at Daiwa Securities SMBC Co. in Hong Kong.

Hong Kong individuals may divert less money for IPOs this month as the holiday shopping season begins and people set aside money for tax bills due in January, said Sullivan.

3Cems Corp., a Taiwan-based maker of printed-circuit boards, in December 2006 canceled a HK$700 million Hong Kong IPO because of a lawsuit against one of its units. In June that year, Sun Hung Kai Properties Ltd. and Henderson Land Development Co. dropped plans to sell real estate investment trusts to the public.

To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

Last Updated: December 3, 2007 06:00 EST