Weak Pricing for Prada’s IPO

Image courtesy of Flickr

Italian fashion powerhouse Prada has been selling its shares on the lower end of its expectations spectrum in its IPO, according to the Wall Street Journal and various other sources that place the blame on slumping stock markets and mounting investor apprehension about paying Italian taxes.

Prada is selling shares at 39.50 Hong Kong dollars. The company, which also owns Miu-Miu initially set their stock in between HK$36.50 and HK$48. The stock will debut on the markets on June 24th.

Prada of course, is not the only company from outside the SAR (special administrative region of China) trying to hone in on wealthy Chinese customers. Many foreign companies have been setting their sights on Hong Kong to go public in hopes of profiting from China’s new status as a powerful economy, hoping to also take advantage of luxury brands and the growing number of Chinese consumers who can afford them. Take a look at my past post on the trend of murses in China to get a background on why these ventures are tres appealing.

In lieu of those numbers, Prada has predicted that China will be the fastest growing luxury goods market in Asia- soon set to become the third-largest market for luxury sales worldwide. But for now, it seems as though investors, who play a big part in Hong Kong IPOs, may also be shunning the company due the possibility they’ll have to pay Italian taxes.

That’s an unusual situation in Hong Kong, which does not tax on such expenditures and has very low taxes compared to other wealthy countries.

About Kristie

Kristie Hang holds a B.A. from the University of California, Los Angeles, in Communication Studies and Asian Humanities and is currently finishing her Masters in the Broadcast Journalism program at the University of Southern California's Annenberg School of Journalism. Born and raised in Los Angeles, CA, she has lived in Hong Kong, traveled extensively throughout Southeast Asia, and studied in Beijing at Tsinghua University as part of the Interuniversity Program for Advanced Chinese Studies. In addition to her current positions as a News Contributor at Annenberg Digital News and a Video Journalist with Annenberg Television News, her media experience includes internships with MTV Networks, CNN International, as well as with the Asia Pacific Institute, where she reported on Asian and Asian-American arts and entertainment. She also enjoys writing about food and travel at her blog, "I Eat Therefore I Am" (http://ate-ate-ate.blogspot.com). She is fluent in Cantonese, English, and Mandarin and whatever is left from four years of spanish.
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