June 23 (Bloomberg) -- Prada SpA's trading debut in Hong Kong just as the territory becomes one of this year's worst- performing markets for initial public offerings may foreshadow a slowdown in IPOs by foreign companies.

After selling shares near the low end of the targeted range for its $2.1 billion IPO last week, the Italian maker of Miu Miu handbags may be poised to fall when it lists tomorrow, over-the- counter trading shows. A decline by Prada would add to losses of $873 million for investors in the 31 Hong Kong IPOs this year, according to data compiled by Bloomberg.

While Hong Kong has lured companies from Prada to Samsonite International SA seeking to tap the world's fastest-growing major economy in China, their shares have retreated as concern about Chinese inflation sent the Hang Seng Index to its worst slump in 2 1/2 years. Only one of the 16 companies that started trading this year after raising more than $100 million in a Hong Kong IPO has risen from its offer price, the lowest ratio among the 10 largest equity markets, Bloomberg data show.

'Companies considering a Hong Kong listing are now in the wait-and-see mode,' said Josef Schuster, founder of Chicago- based IPOX Schuster LLC, which oversees about $2.5 billion. 'Now any issuer who thinks of a listing in Hong Kong will need to give a discount, which makes Hong Kong less attractive for the companies.'

2008 Slump

The 46 companies in the benchmark Hang Seng Index now trade at an average 11.5 times earnings, close to the lowest level since March 2009 and less than the 14.7 times for the Standard & Poor's 500 Index, data compiled by Bloomberg show. The Hang Seng has slumped for five straight weeks, the longest stretch of declines since Lehman Brothers Holdings Inc.'s collapse in 2008.

Milan-based Prada lowered the ceiling for pricing of its IPO and then sold shares at the low end of the revised price guidance, raising $2.14 billion. Samsonite, the world's largest branded luggage maker, dropped 7.7 percent in its debut after selling shares at the low end of a revised range. The company started as Shwayder Trunk Manufacturing in Denver in 1910 closed today at HK$14.50, unchanged from its offer price.

Prada shares last traded at HK$38.50, according to transactions brokered by the gray-market desk at Louis Capital Market in Hong Kong. Prada sold shares at HK$39.50 apiece.

'When those high-profile ones come with a lot of promise and are getting priced at the low end, that's usually a sign that things are tired and investors or companies may decide they need to take a break or bring down their expectations,' said Katherine Schapiro, a San Francisco-based manager at Sentinel Asset Management Inc., which oversees about $20 billion. 'The Hong Kong IPO market has been quite frothy for some time.'

Four Attempts

Prada, which tried and failed four times to go public in the decade through 2010 in markets outside Hong Kong, still managed to extract a valuation of about 23 times estimated full- year earnings, a person with knowledge of the matter said last week.

LVMH Moet Hennessy Louis Vuitton SA, the world's biggest maker of luxury goods, trades at 19.4 times projected earnings, while smaller rival PPR SA, maker of Gucci, is valued at 13.9 times, analysts' estimates compiled by Bloomberg show. Both companies are based and listed in Paris.

Prada is listing after this year's IPOs in Hong Kong lost 8.6 percent on average as of yesterday's close, wiping $873 million off the combined amount they raised, data compiled by Bloomberg show.

'No Blind Investing'

Hong Kong stocks started dropping as Prada, Samsonite and Glencore International Plc were preparing to go public, hammered by investor concerns that China will be unable to contain inflation that soared to an almost three-year high of 5.5 percent last month. Meanwhile, slower-than-expected lending and money supply have added to evidence that the world's second- largest economy is slowing.

'Hong Kong investors have relatively matured over the years and even for global marquee brands, investors will do their analysis,' said Pradeep Rao, head of consumer and health care investment banking for Asia-Pacific at Citigroup Inc. in Hong Kong. 'They'll pay for growth. But no blind investing.'

Hong Kong's woes contrast with the U.S., where first-day rallies by companies including Mountain View, California-based LinkedIn Corp. and Russia's Yandex NV drew comparisons to the 1990s Internet bubble. The 105 U.S. IPOs advanced 1.2 percent on average, creating about $1.9 billion in market value for investors who bought into them, the data show.

Shares of LinkedIn, the first major U.S. social-networking site to hold an IPO, doubled in their first day of trading on May 19. Oakland, California-based Pandora Media Inc., an online- radio company, priced an IPO of $235 million above the range marketed to investors, at $16 a share.

Window Closing

U.S. IPOs have raised $30.5 billion so far this year, beating the $23.6 billion for initial sales in mainland China and the $13.6 billion for Hong Kong deals, according to data compiled to Bloomberg. The $48.2 billion in U.S. offerings last year trailed the $70.3 billion in mainland China and the $51.8 billion raised in Hong Kong.

Foreign companies listing in Hong Kong have had to settle for lower-than-maximum valuations. Macau casino venture MGM China Holdings Ltd. is the only company since October to price an IPO of more than $1 billion in the city at the top end of a marketed range, Bloomberg data show. MGM China shares have fallen 14 percent from the IPO price.

Prince Frog International Holdings Ltd., a Chinese maker of childcare products, delayed an IPO of as much as $200 million by a week to July 15 because of stock market fluctuations, said a person with knowledge of the matter who declined to be identified as the decision isn't public.

'The window of opportunity may be closing,' said Tim Loughran, a finance professor at the University of Notre Dame's Mendoza College of Business in Notre Dame, Indiana. 'The market is becoming less and less receptive.'

To contact the reporters on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net ; Zijing Wu in London at zwu17@bloomberg.net ; Lee Spears in New York at lspears3@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net