Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
The days of massive pop on the first day of the initial frenzy of Hong Kong’s public offering may be coming to an end.
Even though the pandemic spread for most of 2020, China’s offshore IPOs and new listings were in high demand from both institutional investors and mother and pop investors. As most new stock sales made large gains on the first trading day, investor euphoria was justified.
That was then. The game of winning investors for the most part last year to enter IPOs and exit after they have started is no longer a slam dunk: 31% of the thirteen IPOs that raised more than $ 100 million have recorded losses on the first day of this year, almost double compared to 17% in 2020. the movement on the first day showed gains of 2.1% in 2021 compared to 5.7% last year, according to data compiled by Bloomberg.
The volatility triggered by a large turnover in previously unpopular stocks, sensitive to economic fluctuations in highly valued technology and healthcare games, is to blame, according to investors. Others also highlighted concerns about tightening policies in China, as it influences investors’ risk appetite for new stocks.
“Most IPOs performed very well last year, but I don’t expect this kind of move this year,” said Joohee An, a fund manager at Mirae Asset Global Invest (HK) Ltd. Investors will be “more prudent “market liquidity” will not be as abundant as it was, “she added.
Hong Kong bankers are constantly working as IPOs, SPACs are rising (1)
Disruptive performance
To be clear, listings of Kuaishou Technology and New Horizon Health Ltd. did an unusually good time in February, with shares more than doubling on the first day.
But lukewarm post-listing performance is on the rise. Chinese household insecticide company Cheerwin Group Ltd. fell by up to 20% on the first trading day last week. Biopharmaceutical company SciClone Pharmaceuticals Holdings Ltd. closed its debut apartment on March 3 and is now trading 8.6% below its offer price.
The secondary wave of listing of Chinese companies listed in the US has not always had bright debuts in Hong Kong. Autohome Inc., a Chinese online car sales site with a main list in New York, has closed Hong Kong starts on Monday with a modest increase of 2%.
Not everyone is worried, given the growing concerns expressed by some that global markets were in bubble territory.
“When you have these offers that don’t go well, it actually tells you that people are still cautious about what they invest and what they don’t, which is a good sign,” said Sumeet Singh, head of research at Aequitas Research in Singapore. publishes on Smartkarma. “It means the market is doing well.”
Reality analysis
The future many-billions of dollars of listings Baidu Inc. and Bilibili Inc. will be closely monitored to see if the Hong Kong IPO market still has steam, given their size and high profile as technology companies.
Baidu, which had a nearly 3% discount on its US-traded shares, will begin trading on March 23. Investor demand for its supply has been strong, with retail investors placing orders almost 100 times the stock available to them, according to someone familiar with the matter. Bilibili, the video streaming platform that is trying to raise up to $ 3.2 billion in a second list, plans to debut on March 29.
“I certainly don’t care,” said Oliver Cox, a a successful fund manager at JP Morgan Asset Management, in general, “the prospects for increasing the quality and long-term earnings of the companies we see coming to market are still very high, and the prices of IPOs do not affect this,” he said. he said.
Read: JPMorgan Fund with 100% Year-on-Year Gain Focuses on Asia Tech IPOs