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AIA Drives Hong Kong Trading to Second-Highest Level of 2010

AIG Unit Said to Submit Preliminary IPO Application
The American International Group Inc.'s AIA Tower stands in Hong Kong. Photographer: Timothy O'Rourke/Bloomberg

Oct. 30 (Bloomberg) -- AIA Group Ltd.’s initial public offering, the biggest in Hong Kong’s history, propelled stock trading in the city to the second-busiest day of the year.

AIA shares worth HK$49.39 billion ($6.4 billion) traded yesterday, a record for a new listing on its debut in Hong Kong, according to data compiled by Hong Kong Exchanges & Clearing Ltd. A total of HK$136.39 billion shares changed hands on the bourse, more than double the average daily volume of HK$63 billion in the first nine months of the year, the exchange said.

Eight of the year’s ten most-active days were in October as companies from Boer Power Holdings Ltd. and Mongolian Mining Corp. sold shares for the first time, the exchange data showed. The heaviest trading day this year was Oct. 14, when HK$139.07 billion of shares changed hands as the Hang Seng Index climbed to its highest close since June 2008.

“On any day when you have an IPO, volumes go up to reflect that extra trading,” said Andrew Sullivan, a director of institutional sales trading at OSK Securities Hong Kong Ltd. “AIA is a big deal, one of the biggest IPOs ever.”

AIA, the insurer sold by American International Group Inc., surged 17 percent in its first day of trading in Hong Kong yesterday. The company said after the city’s stock market closed that the over-allotment option of the IPO was exercised in full, boosting the amount of funds raised to $20.5 billion.

The depreciation of the Hong Kong dollar has made assets in the city cheaper, luring foreign investors to equities, Sullivan said. The Hang Seng Index rose 3.3 percent this month, its second monthly advance.

The currency is tied to the U.S. dollar, which sank to a 15-year low versus the yen on Oct. 25 and to a more than eight-month low against the euro on Oct. 15. The Hong Kong government has kept the city’s dollar at about HK$7.80 versus the greenback since 1983. Regulators have allowed the currency to trade up to five cents either side of that level since 2005.

“The weakening U.S. dollar makes Hong Kong much more attractive,” Sullivan said. “Things become relatively cheap in Hong Kong because the currency’s fixed to the U.S. dollar.”

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Darren Boey at dboey@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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