Samsonite shares dropped more than 10 per cent on their first day of trading in Hong Kong, despite being priced at the bottom end of the indicative range.

The debut by the US luggage maker represents a dismal performance that could hurt plans by other western brands to tap the Hong Kong stock market for capital.

Samsonite’s stock opened at HK$13 on Thursday, 10.3 per cent lower than its listing price of HK$14.50, against a 1.5 per cent fall in the benchmark Hang Seng index. It ended the session at HK$13.38, down 7.7 per cent.

The company raised HK$9.73bn (US$1.25bn) on Friday when it priced its initial public offering but the valuation at 18.3 times its projected 2011 earnings was relatively high, which has discouraged some investors.

Others were disappointed by the fact that the capital raised would largely go to existing shareholders selling down their stakes instead of being spent on expansion, according to Kevin Tam, senior analyst at Core Pacific-Yamaichi Securities in Hong Kong.

The timing of the listing was also a factor in the stock’s first-day performance. The Hong Kong stock market has been pummelled by a caustic combination of eurozone woes, bearish sentiment on Wall Street and fears of China’s property bubble bursting.

The Hang Seng index has fallen about 7 per cent from May 31, when the market turned sour amid rising scepticism regarding the quality of mainland companies’ auditing and accounts. Investor sentiment is now further weakened by broader concerns about the global economy and a raging debate over whether the Chinese economy is facing a hard landing.

Samsonite’s disappointing debut will be seen as bad news for Italian luxury brand Prada, which is set to price its US$2.6bn Hong Kong IPO on Friday. Many potential retail buyers have already been put off by the prospect of having to pay Italian capital gains tax and dividend withholding tax. On top of that, fund managers have said the valuation at up to 27 times earnings is too high.

Goldman Sachs, HSBC and Morgan Stanley managed the Samsonite IPO. RBS and UBS are acting as joint bookrunners. Moelis served as a financial adviser to the company.

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