Hong Kong IPOs Are Set to Become Asia’s Worst Performers in 2021

(Bloomberg) -- Hong Kong’s newly listed companies are set to become Asia’s worst performers this year amid China’s crackdown on various sectors.

Companies that went public in the city after initial public offerings of at least $100 million are down almost 20% on average from IPO prices, according to data compiled by Bloomberg. That compares with gains of 40% in South Korea, 32% in India and 86% in mainland China, where new stocks often climb due to a tight system for IPO approvals that puts limits on valuations.

Hong Kong’s IPO market has cooled since the initial frenzy driven by cheap funding and ample cash. While first-half proceeds surged 130% on a yearly comparison, the following months were marked by an almost complete absence of major deals due to China’s crackdown on several industries. 

Some major tech names that initially did well after listing early in the year lost altitude as Beijing’s clampdown targeted giant startups with vast data on Chinese citizens. Kuaishou Technology, which debuted in February, almost doubled in value by June, only to erase gains and slump 30% since listing.

About 75% of the 59 companies that began trading in Hong Kong since January are poised to finish the year lower than their IPO price. Equivalent percentages are 34% in India and 28% in South Korea. 

Companies that are in line with China’s new economy are bucking the trend. Electric vehicle makers Li Auto Inc. and XPeng Inc. are up more than 3% and 6%, respectively, since listing in the second half. Biotech names including Brii Bioscience Ltd. and Medlive Technology have climbed more than 30%.   

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