Hottest Hong Kong IPOs of Last Two Years Have Let Down Investors

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(Bloomberg) -- Despite the frenzied debuts of Hong Kong’s most popular initial public offerings over the past two years, the companies’ share prices have slumped an average 22% since their listings, according to data compiled by Bloomberg.

In the city’s 20 most-subscribed offerings, individual investors placed orders for 442 to 6,289 times the stock initially available to them. With an average debut rally of 64%, most of the 20 firms saw their peaks in the first few trading days. Small caps dominate the hot IPO list, except for China Literature Ltd., Ping An Healthcare and Technology Co., and Yixin Group Ltd.

New shares shunned by retail investors, on the other hand, tend to generate small long-term gains. The 38 companies whose retail books were under-subscribed over the last two years have risen on average 2.8% from their IPO prices, data compiled by Bloomberg show.

Hottest Hong Kong IPOs of Last Two Years Have Let Down Investors

All 359 companies listed in Hong Kong during the time period have dropped on average 3% from their offer prices.

Town Ray Holdings Ltd., a maker of household appliances, sank 34% in its debut on Oct. 25, even after attracting individual orders for 274 times the initial retail portion of its offering.

Ascentage Pharma Group International gave up most of its opening rally, as the biotechnology firm debuted Monday after reporting a retail coverage ratio of 752 times, the highest among Hong Kong IPOs this year. The stock closed up 9.9% after opening 57% higher.

The city’s deal flow is making a huge comeback after a slow summer, with $7.9 billion of listings in September and October. That puts the Hong Kong exchange ahead of Nasdaq as the world’s top IPO venue for the last two months.

UPCOMING LISTINGS:

  • Chongqing Rural Commercial Bank
    • Size $1.5b
    • Shanghai stock exchange
    • Listing Oct. 29
    • CICC, China Securities
  • ESR Cayman Ltd.
    • Hong Kong stock exchange
    • Size $1.6b
    • Listing Nov. 1
    • CLSA, Deutsche Bank, Morgan Stanley
  • Hanwha Systems
    • Korea exchange
    • Size up to $390m
    • Pricing Oct. 31; listing Nov. 14
    • Citi, Korea Investment & Securities, NH Investment
  • S Hotels and Resorts
    • Thailand exchange
    • Size up to $249m
    • Listing Nov. 12
    • Credit Suisse
  • Bangkok Commercial Asset Management
    • Thailand stock exchange
    • Size at least $700m
    • Listing date TBA
    • Trinity Securities, Kasikorn Securities
  • Lotte REIT
    • Korea stock exchange
    • Size $353m
    • Listing date Oct. 30
    • HSBC, Korea Investment & Securities, Nomura
  • CMGE Technology Group
    • Hong Kong exchange
    • Size up to $166m
    • Listing Oct. 31
    • BNP, CICC
  • China Feihe
    • Hong Kong stock exchange
    • Size up to $1.1b
    • Listing expected Nov. 13
    • JPMorgan, CMS, CCB International

More ECM situations we are following:

  • China Feihe, a baby formula producer, started taking investor orders on Monday for its Hong Kong IPO, which could raise as much as $1.1 billion
  • Equipment rental business Onsite Rental pulled its IPO in Australia: AFR
  • Chongqing Rural Commercial Bank’s business outlook may remain uncertain in 4Q and beyond, even after a Shanghai listing
  • NetEase aims to list its Cloud Music streaming app in the long term: CEO William Ding
  • Beijing-Shanghai High-Speed Railway Co., a unit of China State Railway Group Co., plans A-share listing in Shanghai
  • Siam Cement’s packaging subsidiary is planning a listing to raise about $1b: Reuters

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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