China National Aviation (CNAC) has postponed the initial public offer of its stock on the Hong Kong exchange in the face of recent market volatility and a sharp drop in share prices.

The airline, a subsidiary of the Civil Aviation Administration of China, had planned to float shares equivalent to around 13% of the company, between 28 and 31 October. A further 8% of stock was to have been placed with ten strategic investors.

CNAC says that the placement will be put on hold "until such a time as the Hong Kong market recovers and appropriate stability returns". The company, which has only just completed an international road show, had been planning to sell the stock at between HK$1.96 (ó25) and HK$2.58 per share, but claims that the volatility of trading made it "-impossible to determine an issue price."

Hong Kong's benchmark Hang Seng index fell by nearly 14% on 28 October, and some major blue-chip stocks dropped in value by 20-30%. Cathay Pacific's share price was more than halved from its peak at over HK$16, while newly listed China Southern Airlines also slumped by 40% from the July issue price of HK$4.75.

No new date has been set for the CNAC listing, although the company's offering documents remain legal for three months, after which it will have to begin the expensive process of starting again.

Source: Flight International