Most of the company's shares issued in a private placement in 2007 will become tradable in 30 days, according to data issued last month. With the release date approaching, the fluctuating price of the company's shares dropped for several consecutive days; on 3 Nov and 4 Nov the company saw its share price close at its intraday minimum limit.

In 2007, the initial placing price of the company's private placement was set at RMB 12.88 per share, but institutional investor enthusiasm pushed the price up to RMB 35.88 per share; still lower than its market price of RMB 60.00 per share at the time. Amidst fierce competition, Youngor Group succeeded in subscribing 100 mln shares for RMB 3.5 bln and Shanghai Electric Power managed to obtain 78.21 mln shares for RMB 2.81 bln. According to Shanghai Electric Power's 3Q Report, these subscribed assets booked proceeds of RMB 400 mln on 30 Sept 2008.

However, in October, the ex-right price of the company's shares dropped below its issue price of RMB 35.88 per share. A preliminary estimation based on market prices paints Shanghai Electric Power with losses over RMB 400 mln; Youngor Group lost nearly RMB 600 mln.

Though fluctuations will be difficult to forecast after the shares are released, market insiders are not ruling out the possibility that this fall in price is the start of a downward trend.

Source: Shanghai Securities News

Date: 5 Nov 2008

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