Baidu, China’s dominant internet search engine company, started trading in Hong Kong with less than 1 per cent premium after completing its HK$23.7 billion (US$3.05 billion) stock offering, underperforming recent big technology listings in the city.
Its shares opened for trading at HK$254, according to stock exchange data, and rose to as high as HK$256.60 before ending their first day of trading unchanged at HK$252, capitalising the Beijing-based company at HK$700 billion.
They were earlier indicated at about HK$255 in grey-market trading on Monday, according to prices quoted at Phillip Securities and Bright Smart Securities. An overnight 3.4 per cent jump to US$266.13 in the firm’s American depositary shares helped shore up the stock following a rally in tech stocks in the US.
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Baidu sold 95 million shares at HK$252 each in its secondary listing, compared with its high-end marketing target of HK$295.
The performance mirrors the weak 3.5 per cent gain in JD.com secondary listing debut in the city last June, and pales in comparison to high-flying short-video app operator Kuaishou Technology, whose US$5.3 billion IPO enriched investors by 161 per cent last month.
Kuaishou’s offering generated 1,204 times in demand versus the number of shares on offer, the most sought-after retail offering in Hong Kong’s stock market history. Baidu’s deal attracted 112 times subscription.
“Investors are not as compulsive as during the Kuaishou IPO to go into the market and make some killing,” said Louis Tse Ming-kwong, managing director at Wealthy Securities. “I don’t think we have that atmosphere or sentiment any more.” He spoke before the stock started trading.
Blame that on timing. Baidu’s listing comes at a time when sentiment on technology companies has soured on valuation concerns. The Hang Seng Tech Index has declined 22 per cent from a February 17 high, while Baidu has slumped by as much on Nasdaq from its February 19 peak.
Markets may be shaken by an overnight escalation in geopolitical risks on Tuesday, following tit-for-tat sanctions between Western powers and China over human rights issues in Xinjiang autonomous region.
Tightening onshore regulatory oversight on internet-platform operators, and bond-market gyrations stemming from policy tightening concerns, have prompted money managers to turn to the safety of old-economy stocks.
Baidu’s 52-year old chief executive officer Robin Li Yanhong has about 17 per cent stake in the company he founded, according to the IPO prospectus. He retains 57 per cent voting power in the company.
The firm controls about 73 per cent of China’s so-called knowledge and information-centric internet platforms business by revenue in 2020, according to the prospectus. The market has grown from 89.6 billion yuan (US$13.8 billion) in 2015 to 173.6 billion yuan in 2019, and is projected to reach 342 billion yuan in 2025.
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This article Baidu becomes first technology giant to make a flat debut in Hong Kong stock market this year as investors spurn the pivot by China’s dominant search engine towards artificial intelligence first appeared on South China Morning Post