Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
The days of the massive first-day pop in Hong Kong’s initial public frenzy may be coming to an end.
Although the pandemic spread during most of 2020, the IPOs abroad and new listings of the Chinese city were very popular with both institutional and mother-and-pop investors. Since the bulk of new stock sales made big gains on their first day of trading, investor euphoria was justified.
That was then. Last year’s largely weeping investor game of stacking up and leaving IPOs after making their debut is no longer a bad blow: 31% of thirteen IPOs with more than $ 100 million incurred first-day losses this year yielded, almost double the 17% in 2020. according to data compiled by Bloomberg, the first-day move in 2021 showed a 2.1% increase in 2021 compared to 5.7% last year.
According to investors, the volatility caused by the large conversion into previously unfavorable equities is sensitive to economic fluctuations due to highly valued technology and healthcare games. Others also pointed to concerns about tightening policy in China, as it weighs investors’ risk appetite for new stocks.
“Most IPOs have performed really strongly last year, but I do not expect this kind of movement this year,” said Joohee An, a fund manager at Mirae Asset Global Invest (HK) Ltd. Investors will be “smarter” market liquidity “will not be as plentiful as before”, she added.
Hong Kong bankers work 24 hours a day as IPOs, SPACs Surge (1)
Wobbly Performance
To be clear, list by Kuaishou Technology and New Horizon Health Ltd. performed exceptionally well in February, with shares more than doubling on the first day.
But the lukewarm performances after the listing are increasing. Chinese household insecticide company Cheerwin Group Ltd. fell by as much as 20% on its first trading day last week. The biopharmaceutical company SciClone Pharmaceuticals Holdings Ltd. ended its debut home on March 3 and now trades 8.6% below its offer price.
The secondary listing wave of U.S. listed Chinese companies has not always had glowing debuts in Hong Kong. Autohome Inc., a Chinese online sales site with its primary listing in New York, has terminated its Hong Kong debut Monday with a modest 2% rise.
Not everyone is worried, given growing concern by some expressed that world markets were in bubble territory.
“If you have these offerings that are not doing well, it actually tells you that people are still cautious about what they are investing in and what is not, which is a good sign,” said Sumeet Singh, head of research at Aequitas Research in Singapore, who on Smartcarma. “That means the market is right.”
Reality check
The coming multi-billion dollar listings of Baidu Inc. and Bilibili Inc. will be closely monitored to see if the IPO market in Hong Kong is still steaming, given their size and high profile as technology enterprises.
Baidu, which has a discount of almost 3% on its US traded shares, will start trading on March 23. The investor’s demand for his offer was strong, with retail investors placing orders for nearly 100 times the stock they made available, according to a person familiar with the matter. Bilibili, the video streaming platform that wants to raise as much as $ 3.2 billion in a second listing, plans to debut on March 29.
“I’m definitely not worried,” said Oliver Cox, a top performing fund manager at JP Morgan Asset Management, in general, the long-term growth and earnings growth prospects of the companies we see in the market are indeed still very high, and the price of IPOs does not affect this.
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