Debutants stumble in crowded house

Business | Avery Chen and Bloomberg 17 Jan 2020

Hong Kong's initial public offering market is going through a busy week, with 17 companies starting trading in the city. However, most of them fell after their stock market debuts.

Seven companies began trading on the mainboard yesterday, but only three of them closed higher than their offer prices.

Among them, the highest-profile new stock is Chinese TV drama producer Values Cultural Investment (1740), which received an oversubscription of 1,212 times in the retail portion of its IPO. Share of Values Cultural closed at HK$0.70 in its market debut, 40 percent higher than its offer price, with a market turnover of HK$488 million.

Although mainland property developer Huijing Holdings (9968) is supported by veteran investor Jim Rogers, its shares only rose 1.04 percent to HK$1.95 yesterday. Rogers attended the listing ceremony of Huijing as an honorary advisor yesterday. When asked about Hong Kong's competitiveness, he said Hong Kong is a very attractive market for international investors at the moment as the Chinese market has not yet opened. If Shanghai opens, it will be much more competitive than Hong Kong.

Another new debutant, Shanghai Gench Education (1525), a private university operator, rose 12.6 percent to HK$6.81 yesterday.

The worst performer among the seven new stocks was marketing company Activation Group (9919), whose shares fell 22.28 percent to HK$1.57.

In addition, three companies will begin trading on the mainboard today, but all of them fell in the gray market last night.

Chinese online tour guide provider Lvji Technology (1745), whose retail portion was 83.66 times oversubscribed, slumped 15.09 percent to HK$1.80 in the Bright Smart gray market.

JiaChen (1937), manufacturer and seller of access flooring products, plummeted 27.36 percent to HK$0.385, while facade works contractor Wah Wo (9938) slid 1 percent to HK$0.495.

The Hong Kong stock market continued to show the world that it's built on strong foundations and continues to attract some of the best companies around the world, said Charles Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing (0388).

About HK$312.9 billion was raised from 183 new listings in 2019, enough to push Hong Kong's IPO fundraising market into first place worldwide, which reflects a strong vote of confidence in Hong Kong's financial markets, he added.

"Our city has proven time and again that it is capable of reinvention, even thriving when people pull together for a common goal," he said.

Separately, Chinese ride-hailing startup Dida Chuxing is seeking to raise as much as US$300 million (HK$2.34 billion) and is considering an initial public offering, escalating competition against larger rival Didi Chuxing, Bloomberg reported. IDG Capital-backed Dida has mulled floating on exchanges in mainland China or Hong Kong but prefers the latter, the source said.

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