HKEX jumps 6pc on optimism over IPOs

Business | Avery Chen and Bloomberg 26 May 2020

Shares of Hong Kong Exchanges and Clearing (0388) rose more than 6 percent yesterday on optimism that more US-listed mainland companies would launch secondary listings in the city and the news that the bourse is looking at shortening the initial public offering settlement time.

The stock ended 6.18 percent higher at HK$275 yesterday, the top gainer among blue-chip stocks, with HK$3.93 billion worth of shares traded.

HKEX was supposed to meet with brokers yesterday to discuss the proposal on speeding up the IPO process from pricing to trading from the current five days to one day. But the meeting was rescheduled as some industry insiders differed about the plan, media reported.

HKEX said it is studying how to improve the IPO settlement process, which will strengthen the competitiveness of the IPO market, and it will announce developments in due course.

Chinese game developer NetEase reportedly aims to list shares in Hong Kong on June 11 to raise up to US$2 billion (HK$15.6 billion), while second-largest Chinese online retailer JD.com is planning to make a debut on June 18 to raise as much as US$3 billion.

Shares in US-listed Chinese companies have see-sawed since senators approved legislation last week that could bar the country's firms from American exchanges.

Deloitte China expects that three to five mainland companies will kick off secondary share sales in Hong Kong this year, driving total funds raised to above HK$160 billion, which would help the city retain its position in the top three IPO markets in the world, said Edward Au Chun-hing, Southern region managing partner and co-leader of the national public offering group.

Morgan Stanley expected that if all eligible US-listed Chinese firms dual list in the city, the capitalization of Hong Kong stocks will increase by HK$9 trillion, with the daily turnover growing by HK$137 billion, which would double HKEX's revenue after 2022.

The investment bank has raised the target price of HKEX to HK$310 from HK$270 with an "overweight" rating.

In other IPO news, Chinese retail group Wumei Holdings is considering an IPO in Hong Kong, a source said.

The Beijing-based company owns grocery operator Wumart Stores as well as the local operations of home-improvement chain B&Q.

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