Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
The days of big first-day pop in the Hong Kong initial public offering frenzy may be coming to an end.
Even with the pandemic spreading most of 2020, the initial public offerings of the Chinese offshore city and the new listings were in high demand by institutional and small investors. With most of the new stock sales posting big gains on the first day of trading, the investor’s euphoria was justified.
That was before. The investor’s largely winning game last year of piling up on IPOs and leaving after debut is no longer a straight hit: 31% of the thirteen IPOs that raised more than $ 100 million recorded losses on the first day of this year, almost the double the 17% in 2020. A median The change from the first day showed gains of 2.1% in 2021, from 5.7% last year, according to data compiled by Bloomberg.
The volatility caused by the high turnover in previously unloved stocks, sensitive to the economic fluctuations of highly valued technology and healthcare companies, is to blame, according to investors. Others also pointed out concerns about policy tightening in China, as a burden on investors’ risk appetite for new stocks.
“Most IPOs performed very, very strongly last year, but I am not expecting that kind of movement this year,” said Joohee An, a fund manager at Mirae Asset Global Invest (HK) Ltd. Investors will be ” more prudent, “as market liquidity” will not be as plentiful as it used to be, “he added.
Hong Kong bankers work 24 hours a day as IPOs, increased SPACs (1)
Unstable performance
To be clear, listings by Kuaishou Technology and New Horizon Health Ltd. still performed exceptionally well in February, with stocks more than doubling on the first day.
But the post-listing warm performance is increasing. Chinese household insecticide company Cheerwin Group Ltd. plunged up to 20% on its first trading day last week. The biopharmaceutical company SciClone Pharmaceuticals Holdings Ltd. ended its debut on March 3 stable and is now trading 8.6% below its offer price.
The wave of secondary listing of Chinese companies listed in the United States has not always had brilliant debuts in Hong Kong. Autohome Inc., a Chinese online car sales website with its primary listing in New York, has closed its Hong Kong opens on Monday with a modest 2% increase.
Not everyone is concerned, given the growing concerns expressed by some that the global markets were in bubble territory.
“When you have these businesses that are not going well, it really indicates that people are still being cautious about what they are investing and what they are not, which is a good sign,” said Sumeet Singh, head of research at Aequitas Research in Singapore, which publishes on Smartkarma. “It means that the market is doing well.”
Reality check
The next multi-billions of dollar listings of Baidu Inc. and Bilibili Inc. will be closely watched to see if the Hong Kong IPO market is still strong, given its size and high profile as technology companies.
Baidu, which has a nearly 3% discount price for its shares traded in the U.S., will begin trading on March 23. Investor demand for their offering was strong, with retail investors placing orders for almost 100 times the stock made available to them, according to a person familiar with the matter. Bilibili, the video streaming platform that aims to raise up to $ 3.2 billion in a second listing, plans to debut on March 29.
“I’m definitely not worried,” said Oliver Cox, a high-performance fund manager at JP Morgan Asset Management, in general, “the quality and growth prospects of the long-term earnings of companies that we see coming to the market are still very high and IPO prices do not affect that,” he said. he.
Read: JPMorgan Fund with 100% one-year gain focuses on Asia Tech IPOs