Shares in Zhengzhou Coal Mining Machinery slumped in their first day of Hong Kong trade after underwriters of the $300 million offering were stuck in the rare position of holding unsold stock, underscoring poor demand that bodes ill for mainland insurer PICC's bigger debut on Friday.

Tumbling coal prices have made it a particularly inauspicious time for coal-related firms to come to market, but it has also been a bad season for many listings in the region, with investors spooked by China's economic slowdown, Europe's debt crisis and the underperformance of several IPOs last year.

New stock offerings in Hong Kong have dwindled and volumes are down by about 63 percent so far this year, according to Thomson Reuters data, a shocking reversal for the city which had been world's top IPO destination in 2009 and 2010.

Shares in Zhengzhou Coal Mining Machinery Group Co Ltd, which is also listed in Shanghai, dropped to HK$9.47, down almost 9 percent from their listing price of HK$10.38.

That in turn had been the bottom of its indicative range of HK$10.38 to HK$12.28.

The benchmark Hang Seng index climbed 2.2 percent.

The $37.2 million in unsold stock is not subject to any lock-up conditions and could hang over the company's Hong Kong share price for some time.

Like Zhengzhou Coal, state-owned PICC Group priced its offering near the bottom of the indicative range. PICC's underwriters also ended up revising down the company's valuation and IPO size, raising a less-than-hoped-for $3.1 billion.

Companies including Zhengzhou Coal and PICC Group have increasingly relied on funds from so-called cornerstone investors to get their deals done. Cornerstones back many Asian listings, committing to buy large, guaranteed stakes and agreeing to a lock-up period during which they will not sell their shares.

PICC Group had more than half of its IPO covered by cornerstone orders, including a $500 million investment from US insurer American International Group. Zhengzhou Coal secured $120 million in pledges from investors including asset manager Shikumen Capital and coal producer Inner Mongolia Yitai Group Co Ltd.

Coal prices have declined by a fifth so far this year, likely prompting miners to slow or delay expansion plans, reducing demand for new machinery produced by Zhengzhou Coal and other companies.

(HK Edition 12/06/2012 page2)