Brazils Vale says HK shares to start trading
KELVIN CHAN - AP - Sun Dec 05, 12:41AM CST
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HONG KONG (AP) — Brazil's Vale mining company, the world's biggest producer of iron ore, says that a secondary listing of its shares will start trading on the Hong Kong stock exchange on Wednesday as it seeks greater access to investors in China's booming economy.
Vale SA said Sunday the shares will be in the form of two classes of Hong Kong Depositary Receipts.
They will be the first Hong Kong Depositary Receipts to trade on the city's stock exchange since the framework was set up more than two years ago.
Vale officials said the company will not actually be raising any money by selling new shares. Each depositary receipt will instead represent one Vale share traded in Sao Paulo, Brazil, where Vale's primary listing is.
Company executives said they hope to attract more investors from Asia, especially China, which was its biggest source of revenue in 2009 at 37 percent.
"Our commitment to Asia is for the long term so I'm not worried whether it (the Hong Kong Depositary Receipts) will be successful six months from now," said Chief Financial Officer Guilherme Cavalcanti.
Vale is counting on growth from China and other developing Asian countries to make up for slowing growth from developed Western countries, Cavalcanti said.
China has been investing in large infrastructure projects such as roads, airports, railways, factories, bridges and housing, which all require vast amounts of steel.
Steel's main ingredient is iron ore.
China's neighbors such as India are also investing in infrastructure projects, which will also help demand outpace supply for the minerals it produces, Cavalcanti said.
Hong Kong's stock market is trying to diversify its business as it faces increasing competition from its rivals in China.
Allowing overseas companies to list their shares in Hong Kong through depositary receipts is part of the stock exchange's strategic plan to diversify the types of companies traded.
Vale studied other Asian markets but chose Hong Kong because the market is large, has many individual investors and draws investors from China and other Asian countries, said Roberto Castello Branco, the company's director of investor relations.
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