HKMA sells $3.1b to defend peg amid IPO boom

Business | Avery Chen and agencies 16 Sep 2020

The Hong Kong Monetary Authority sold a combined HK$3.1 billion into the market yesterday after the local currency hit the strong end of its trading band twice amid a series of initial public offering activity.

The aggregate balance, a measure of interbank liquidity, will increase to HK$209.41 billion, a nearly three-year high.

The HKMA has been conducting sales in recent sessions to weaken the currency and keep it within the band. The Hong Kong dollar has touched the strong end of its trading band around 40 times since April.

Meanwhile, Hong Kong is gearing up for its second busiest week for equity offerings this year.

Two companies launched public shares yesterday. Chinese property software company Ming Yuan Cloud, which is seeking to raise as much as HK$6.17 billion, saw a strong response from retail investors on its first IPO day. Local brokers loaned HK$61.39 billion for Ming Yuan Cloud's deal yesterday, meaning its retail portion is more than 99 times oversubscribed.

Meanwhile, Skymission Group, a local formwork works subcontractor, launched a Hong Kong IPO to raise up to HK$176 million. It is expected to go public on September 29.

Separately, Huazhu Group's secondary listing only attracted HK$165 million in margin funds from local brokers as of yesterday, meaning its retail tranche was only 22 percent covered.

In other IPO action, Autohome, a Chinese online car sales website, is planning a second listing in Hong Kong that could raise about US$1 billion (HK$7.8 billion), people familiar with the matter said.

New York-listed Autohome, which counts Ping An Insurance (2318) as its largest shareholder, is working with advisers on the Hong Kong share sale, the people said. An offering could happen as soon as early next year, one source said.

And Fourace Industries (1455), personal care and lifestyle electrical appliances maker, surged 2.3 times to HK$1.32 on the first trading day yesterday.

China Evergrande New Energy Vehicle (0708) is selling HK$4 billion shares on the heels of Xiaomi (1810) co-founder cashing in nearly HK$8 billion in a stake sale.

Shares of China Evergrande New Energy Vehicle slumped 11.48 percent to HK$25.05 yesterday after the electric vehicle unit of China Evergrande (3333) said it would sell HK$4 billion worth of shares to not less than six investors, including Tencent (0700).

Other investors include venture capital company Sequoia Capital, billionaire Jack Ma Yun's Yunfeng Capital and mainland ride-hailing firm Didi Chuxing. At least six investors will buy 176.58 million shares or about 2.04 percent of the issued shares, the company said.

It will issue the shares at HK$22.65 apiece, a 19.96 percent discount against Monday's closing price.

The company plans to use the net proceeds for general corporate purposes.

Vice chairman Liu Yongzhuo said last month that the company would start mass production of its new energy vehicles in the second half.

China Evergrande's shareholding will be lowered to 73.5 percent from 74.99 percent after the deal.

Meanwhile, Lin Bin, vice chairman of Xiaomi (1810), sold 350 million shares in the company for HK$7.89 billion yesterday, data from shareholding disclosure showed.

That came after the smartphone maker's shares had jumped 118 percent this year and a better-than-expected second-quarter result drove its share up to a record HK$25.7 earlier this month.

Xiaomi's share plunged 5.10 percent to HK$22.35 yesterday after Bloomberg first reported the stake sale on Monday night.

Lin sold the shares at HK$22.55, the bottom of the price range of the placement agreement, a discount of 4.25 percent against Xiaomi's Monday closing price. Lin's shareholding has been lowered to 0.75 percent from 2.73 percent.

He will be subject to a five-year lock-up period after the sale, excluding up to 120 million Class B shares of the company, which will be donated to Bin Lin and Daisy Liu Family Foundation, including 60 million shares for Xiaomi Foundation, the company said yesterday.

Both entities will be free to deal in those shares and use the proceeds for charitable purposes, Xiaomi said.

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