David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

If Saudi Arabian Oil Co. was looking for a reason to spurn Singapore as a venue for its initial public offering, it need look no further than Hong Kong.

United Co. Rusal's listing of a 10 percent stake there in 2010 was hailed by billionaire Chief Executive Officer Oleg Deripaska as the first of a wave of share sales from his home country. "There will be more Russian companies on the Hong Kong stock exchange," he said on the day of its trading debut.

Heavy Metal
Rusal's shares have slumped since it first listed in Hong Kong
Source: Bloomberg

The promise never worked out. Despite the mooted offering of Deripaska's power utility EuroSibEnergo OJSC and a proposed sale of shares in GV Gold OAO in the weeks after Rusal's listing, it remains the only Russian company to have sold shares in Hong Kong, according to data compiled by Bloomberg.

Now, even Deripaska is looking west. Rusal's executives and bankers have been in talks on selling a 20 percent stake, people familiar with the matter told Yuliya Fedorinova of Bloomberg News this week -- but this time, they'll be looking at London instead.

That shouldn't be surprising. Hong Kong's exchange is a great place to trade shares in Chinese and local companies. However, as Gadfly argued when Vale SA withdrew its secondary listing there last year, it's pretty useless when it comes to overseas businesses, especially those with no interest in the region beyond exchange incentives and a vague sense that there's a lot of money in Asia.

Rusal's Hong Kong shares are a case in point. Trading volumes are a rounding error next to the company's HK$63 billion ($8.1 billion) market capitalization -- equivalent last year to just 2.6 percent of the company's current value. That compares with 37 percent for BHP Billiton Ltd.'s London-traded shares and 57 percent for Polymetal International Plc, a Russian miner with a primary listing in London.

Illiquid Metal
Buying and selling of Rusal's Hong Kong-listed shares barely registers next to London-listed peers
Source: Bloomberg
Note: Based on London listings and depositary receipts for all companies except Rusal, which is for the Hong Kong listing.

The picture is even starker in terms of bid-ask spreads, a decent proxy for the liquidity of a stock (the most widely traded have the smallest spreads, with Facebook Inc., Apple Inc. and the SPDR S&P 500 ETF Trust all at less than one hundredth of a percentage point).

Russian metals and mining companies with main listings in London or Moscow show what ought to be the usual condition: The common stock is the most liquid, with offshore depositary receipts having wider spreads than the securities they're based on. Rusal is the opposite, with spreads on its Moscow-traded receipts nearly a tenth of a percentage point tighter than those on the Hong Kong shares.

Asking for It
Rusal's Russian depositary receipts are more liquid than its Hong Kong shares, based on bid-ask spreads as a percentage of prices
Source: Bloomberg
Note: Based on average of latest day's bid/ask spreads as percentage of mid price. All primary listings are in Moscow except Rusal (Hong Kong) and Polymetal (London). All receipts trade in London except ones on those two companies, which trade in Moscow.

Aramco, as Saudi Arabia's state oil company is known, can take a lesson from this. Should Saudi Arabia want an Asian listing, it would find deeper pools of savvy, interested investors in Hong Kong, or Mumbai, or Tokyo (or even Bangkok, Seoul or Sydney) before it bothers with Singapore. The local board's only significant company in the business of selling petroleum products is China Aviation Oil Singapore Corp., which supplies jet fuel to Chinese airlines, and the city-state has a checkered history with foreign listings, as Gadfly's Nisha Gopalan has pointed out.

Follow the Money
The market capitalization of oil and gas producers listed in Singapore makes it a minnow in global terms
Source: Bloomberg
Note: Includes only companies with at least $1 billion in trailing 12-month revenue.

Stock markets, like countries, have unique appetites, which companies looking to promote their shares ignore at their peril. No one is going to make a fortune selling durian fruit and century eggs to the Middle East. Getting the world's biggest oil company to appeal to Singapore investors' palates may prove just as challenging.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Rusal's board hasn't considered or discussed any secondary share offer in London, the company said Friday in a statement to the Hong Kong exchange.

  2. Rusal, for instance, has in the past been granted waivers from Hong Kong's listing rules around the size of its free float and the independence of its directors.

To contact the author of this story:
David Fickling in Sydney at

To contact the editor responsible for this story:
Matthew Brooker at