The Air China IPO was of interest as it represented the first Chinese IPO in London for four years. Against a background of high fuel prices and a highly competitive airline industry, it represented an opportunity to determine global investor interest for Chinese 'red chip' stocks.
While the investment story was based on China's growth economy and the position of the airlines within it, it was hijacked by two other events.
First, on the positive side, the IPO was underpinned by the investment in 9.9 per cent of Air China by Cathay Pacific. This provided significant endorsement and comfort to the international investment community. However, the main event was the untimely revelation of China's 'Enron' - the collapse of China Aviation Oil, the country's main fuel supplier. This raised wider governance issues for investors.
Citigate Dewe Rogerson was unlucky that the crisis came at the time of the China Air IPO, with the result that the international news coverage was neutral.
The Financial Times in particular took a cautionary stance. Maybe the paper was right. While the Air China shares rose eight per cent on the day of the listing, they have since slipped to below the offer price.