Hong Kong IPOs Stumble in Weak Start to The Year

(Bloomberg) -- Initial public offerings in Hong Kong have suffered one of the worst starts to the year in a decade in terms of performance just as the coronavirus epidemic threatens to dry up the pipeline.

The 20 companies that listed in the financial hub in January have fallen an average 16% from their offer prices and only three are trading above them, data as of Thursday compiled by Bloomberg show. In their first week of trading, they dropped by an average 6%, making it one of the worst first-week performances of the past decade for this period. Newly listed companies did worse than that only in 2019.

Stocks in Asia have been battered by the coronavirus epidemic, with Hong Kong’s Hang Seng Index reversing all the gains it made in a rally before the Lunar New Year festivities that had prompted a spree of share sales by companies and shareholders.

The lackluster performance for IPOs in Hong Kong comes amid one of the busiest starts to the year in the last decade. The only other time more firms listed in January was in 2018, with 25 companies completing IPOs.

One of the outliers this month was Chinese eatery chain operator Jiumaojiu International Holdings Ltd., which has jumped 29% from its offer price and staged a hugely successful IPO where the retail portion was 638 times oversubscribed.

Still, the stock market slump and uncertainty caused by the coronavirus outbreak are likely to dry up the pipeline at least temporarily. With many flights to mainland China canceled, employees made to work from home and recommendations to curb work meetings, completing an IPO will be a far from smooth process.

Singaporean taxi operator Trans-cab Services Pte. has already halted work on its second attempt to list as a result of the virus. Chinese biotech firm InnoCare Pharma Ltd. has decided to postpone investor meetings to gauge demand for its Hong Kong listing, people familiar said this week.

UPCOMING LISTINGS:

  • Central Retail
    • Thailand stock exchange
    • Size up to $2.6b
    • Books close Feb. 3, listing Feb. 20
    • Bualuang Securities, Phatra Securities, Credit Suisse, Morgan Stanley, UBS
  • Lion Air
    • Indonesia stock exchange
    • Size over $500m
    • Pre-marketing from Jan. 27-Feb. 7
    • BNP Paribas, Morgan Stanley
  • Elite Commercial REIT
    • Singapore stock exchange
    • Size up to $170.3m
    • Listing Feb. 6
    • OCBC Bank, UBS, CGS-CIMB and CICC
  • PT Champ Resto Indonesia
    • Indonesia stock exchange
    • Size about $150m
    • Pre-marketing started Jan. 31
    • CLSA
  • Shenzhen Leoking Environmental Group
    • Hong Kong exchange
    • Pre-marketing started Dec. 18
    • CLSA sole sponsor
  • Mr D.I.Y Group
    • Bursa Malaysia
    • Size up to $500m
    • Pricing date TBD
    • CIMB, Maybank
  • Gongniu Group

    • Shanghai exchange
    • Size $519m
    • Listing TBA
    • Sinolink Securities

More ECM situations we are following:

  • Champ Resto will begin gauging demand for its Indonesian IPO from Jan. 31, according to terms obtained by Bloomberg News.
  • K-Pop BTS Management company Big Hit Entertainment sent requests for proposal to investment banks to hire IPO arrangers, the Seoul Economic Daily reported, citing unidentified people in the investment banking industry.

SEE ALSO:

  • Asia ECM Weekly Agenda
  • IPO data
  • U.S. ECM Watch
  • EU ECM Watch
  • To receive the ECM Watch in your inbox daily, click the “subscribe” button at the top of this article

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