MercoPress. South Atlantic News Agency

Brazilian iron-ore giant Vale traded at a premium in Hong Kong market debut

Vale Chief Financial Officer Guilherme Cavalcanti

Brazilian corporation Vale, the world's biggest iron ore miner, listed on Wednesday at the Hong Kong stock exchange where it traded at a premium to New York's close, as the company looks to raise its profile among Asian investors.

The listing further underscores the Hong Kong bourse's position as one the world's premier stock exchanges. Rio de Janeiro-based Vale is the first company to issue so-called Hong Kong Depositary Receipts (HDRs) after the bourse implemented new rules for them in 2008.

“More companies will seek listings in Hong Kong as they look to tap Asia's biggest liquidity pool,” said Chi Lo, chief executive officer of HFT Investment Management (HK) Ltd.

Vale's HDRs closed at HK$265.20, 0.7 percent above Vale ADRs' (VALE.N) closing price of $33.93 (HK$263.38) on Tuesday, and 1.4 percent above the closing price of 56.72 Brazilian real (HK$261.61) on the Brazilian stock exchange (VALE5.SA). The HDRs opened at HK$270.

The broader Hong Kong stock market .HSI closed down 1.43 percent.

Vale Chief Financial Officer Guilherme Cavalcanti said the company was attracted by the large number of retail investors in Hong Kong as the firm aimed to enlarge its Asian investor base.

HDRs offer an alternative listing route for companies from jurisdictions that prohibit share issues overseas.

The company, which is not raising any new money from the listing, said its existing holders have requested to convert 7.725 million of the company's American Depositary Receipts (ADRs) in New York to be traded on the Hong Kong Stock Exchange.

Of this total, 5.322 million are common shares 6210.HK and 2.403 million are preferred shares 6230.HK. A Hong Kong listing will allow Vale shares to be traded across more time zones.

“Resources and mining stocks are worth accumulating for longer-term investments as the U.S. dollar is expected to remain weak in the medium term,” said Linus Yip, strategist from First Shanghai Securities.

Asia is Vale's main export market and China is its biggest customer, accounting for nearly a third of sales. Analysts expect market participants in Asia to receive the HDRs positively. J.P. Morgan Chase & Co (JPM.N) is the sole sponsor for Vale's HDRs.

Vale follows in the footsteps of some high profile names, including Russian aluminum company UC RUSAL Ltd. (0486.HK) and French skincare products retailer L'Occitane International SA (0973.HK), which looked to tap a booming pool of Asian investors.