UC Rusal Opens Lower on Hong Kong Trading Debut

HONG KONG -- Russian aluminum giant UC Rusal Ltd. fell on its trading debut Wednesday in Hong Kong, amid weak local market conditions.

Rusal, the first Russian company to be traded in Hong Kong, was trading at HK$9.77 at 0312 GMT, down 9.5% from its initial public offering price of HK$10.80 a share. The Hang Seng Index was up 0.9% at 20,295.

Rusal's chief executive, Russian mogul Oleg Deripaska, told reporters Wednesday he believes the company's listing price was reasonable. "You see what's happening in markets all over the world," he said, without elaborating.

Since the start of 2010, the benchmark Hang Seng Index is down nearly 8% and fell to its lowest level in over four months on Tuesday.

Despite the weak debut, turnover for Rusal's shares was low at HK$471.6 million, when compared with its market capitalization of nearly HK$150 billion, in a sign that not many investors are selling. "I don't think these institutional investors are in for the short run," said Alex Wong, a fund manager at Ample Financial Group.

Rusal raised US$2.55 billion from a dual IPO in Hong Kong and Paris before its listings on the bourses Wednesday.

Rusal sold 1.84 billion shares at HK$10.80 each, the midpoint of an indicative price range of HK$9.10 to HK$12.50.

However, concerns about the possible risks associated with the company, as illustrated by the 31 pages of risk factors in its listing prospectus, may not make the stock particularly attractive for many investors.

Given the many risks and the fact that the stock doesn't have very attractive concepts yet, "I'd rather buy Chalco," said Ernie Hon, a strategist at ICBC International.

Chalco, also known as Aluminum Corp. of China Ltd., is China's biggest alumina producer by revenue. The stock was up 0.6% at HK$8.23.

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