The Hong Kong stock exchange greeted its busiest day in 18 months for new listings, with seven companies making their trading debuts, as the city enjoys a respite from social unrest in recent weeks.
The number of listings is the most since eight companies began trading on July 12, 2018, according to exchange data. The raft of stock offerings in the new year underscores the confidence in Asia’s third largest capital market in the face of economic challenges brought on by months of anti-government protests.
Several dozen executives, bankers, accountants and lawyers involved in the seven IPOs gathered at the exchange’s trading hall to witness the customary listing ceremony.
The first trading day is typically highlighted by the sounding of a ceremonial gong in the hall. The seven, however, had to share the honour with only four gongs in the hall.
The seven companies, ranging from producer of hit TV series to furniture maker and events organiser, raised a combined HK$2.65 billion (US$341 million) from their share sales, according to exchange data.
Not all are having a magnificent outing, though. Shares of three companies, Values Cultural Investment, Shanghai Gench Education Group and Huijing Holdings gained at the close of trading. Four others Activation Group, Sanvo Fine Chemicals, QP Group and Kwung’s Holdings fell below their IPO levels.
— Kathleen Magramo (@kathmaemagramo) January 16, 2020
Chinese restaurant chain Jiumaojiu jumps 56 per cent on Hong Kong debut after biggest IPO of new year
Values Cultural rose the most, to HK$0.70 for a 40 per cent gain above its IPO price of HK$0.50, while Shanghai Gench climbed 13 per cent to HK$6.81 and Huijing added 1 per cent to HK$1.95.
Shares of Kwung’s fell the most, losing 25 per cent to HK$0.96. Activation Group slipped 22 per cent to HK$1.57, while Sanvo dropped 21 per cent to HK$1.03 and QP Group declined 7 per cent to HK$1.10.
The seven are among 22 companies that have unveiled their stock offerings so far this year, including the biggest by Chinese restaurant chain operator Jiumaojiu International Holdings whose shares surged 56 per cent on its January 15 debut.
“Twenty-two IPOs in two weeks and seven listings in a single one day, these are magnificent statistics” given the political and economic circumstances, said Edmond Hui, chief executive of Bright Smart Securities. “It shows the strength of the Hong Kong capital market.”
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Hong Kong has continued to burnish its reputation as the top capital market despite the city’s worst political crisis in history and an economic recession. Even so, Hong Kong has enjoyed a relative calm as protests subsided in the past two weekends.
Ernest Chen, chairman of Sanvo, said the seven listings on a single day showed that social unrest has not hurt the market fundamentals. Funds raised will be used to develop its projects in the Greater Bay Area and other mainland markets, he said.
Susanna Chiu, an independent director of Huijing Holdings, said the mainland developer has big plans in Guangdong and Hunan provinces. It considers Hong Kong an important capital market and a listing in the city can facilitate its fundraising and raise its international profile, she said after the listing ceremony.
The hottest of the IPOs is Values Cultural Investment, which produced popular TV drama series including The Distant Distance and National Spirit. Its share allocation for local retail investors, at HK$0.50 each, was oversubscribed by 1,212 times.
Mainland-based developer Huijing Holdings Group raised the most money among Thursday’s bunch, with HK$1.39 billion. Its retail portion, however, was underwhelming, as buyers took up only 32 per cent of the available shares.
“The large number of IPOs at the same time also led investors to focus on only the popular ones such as Jiumaojiu and Values Cultural and ignore the others,” said Hui.
Activation Group Holdings, which organises events for luxury brands like Chanel, Louis Vuitton and Mercedes-Benz in the mainland market, was also well-received. Investors spent HK$345 million to buy its shares, while the retail tranche was oversubscribed 114 times.
Three companies, Jiumaojiu International Holdings (9922 HK), CTR Holdings (1416 HK) and Beijing Enterprises Urban Resources Group (3718 HK) started trading on the Hong Kong stock exchange on Wednesday.@SCMPNews @scmpbusiness pic.twitter.com/2f1wk8EXbY
— Kathleen Magramo (@kathmaemagramo) January 15, 2020
Kenny Ng Lai-yin, securities strategist at Everbright Sun Hung Kai, said the companies want to capture the timing.
“Timing is generally the most important consideration for new IPOs,” he said. “The stock market has produced a good performance at the beginning of 2020,” he added, saying the momentum could build if the broader market holds above a technical support level.
More from South China Morning Post:
- Hong Kong’s equity punters drive up cost of money as demand for local currency increases amid fervour for initial public offerings
- Hong Kong to remain among top three IPO markets globally in 2020, raise HK$260 billion, PwC says
- Hong Kong beats Nasdaq to IPO crown as Alibaba, Budweiser mega listings lift funds raised to US$40 billion for 2019
- Hong Kong’s stock market has a midsummer’s nightmare as fundraising dries up in worsening trade war and street mayhem
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