I have refrained from commenting on the HK market as I gathered experience and information sources, but some recent news items lead me to speak out with some measure of confidence today.

Please consider Prada IPO Said to Value Company at More Than European Rivals and Prada’s $2.6-billion IPO plan puts it above peers.

Hong Kong is a Greater Fool than Italy

While Prada is an Italian company, PIIGS-labeled Italy isn’t doing too hot right now, and Asia does account for 40% of Prada’s sales, so there is some plausible story for listing in Hong Kong. But let’s not kid ourselves, the reason it is listing in Hong Kong is because Hong Kongers (read: institutional and accredited clients of Goldman, CLSA, Unicredit and Intesa Sanpaolo) pay more.

Equityholders are Greater Fools than Debtholders

In fact, Prada’s valuation will be so high its cost of debt will exceed its cost ...