Dire performance of new Hong Kong listings clouds prospects for IPO pickup

HONG KONG (Reuters) – Most shares listed in Hong Kong since early last year have traded well below their original selling prices, data showed. The remainder of 2022.

Of the 132 initial public offerings (IPOs) and secondary listings (raising a total of $47.6 billion) on the city’s stock exchange since early 2021, 111 are now on the market, according to data from analytics firm Dealogic. traded at a loss.

The market has been ravaged by a storm of volatility over the past two years, including economic turmoil from the COVID-19 pandemic, war in Ukraine, rising inflation and interest rates in major economies, and a wave of regulatory restrictions in China.

“Not all new deals are the same and some look fine, but many IPOs on offer today often have the same appeal as quality companies listed today. Not only is it a long earnings history that is trading well below its intrinsic value, said Sam Lecornu, co-founder of fund manager Stonehorn Global.

“I think this is what the market is telling you, why buy an IPO when there are better companies listed at better prices.”

In Hong Kong, new IPO volume has plummeted by 90% so far this year. The city’s benchmark Hang Seng Index (.HSI) is down 14%, led by a 22.7% decline in the technology sector (.HSTECH) and a 15% decline in real estate (.HSNP).

Property developer Samsung Holdings Group Co. (6611.HK) has seen its worst new listing in 19 months, with its share price down 93% since its IPO last July.

Health care company Broncas Holding (2216.HK) is down 86%, while Suzhou Medical Sciences Co. Ltd. (2170.HK) is down 85.1% since its February 2021 listing.

The biggest deal of the year is likely to be that of Shanghai-listed China Tourism Duty Free Company (601888.SS). The company has applied for a secondary listing in Hong Kong, where it could raise between $2 billion and $3 billion in the third quarter, sources told Reuters. He reached out to the China National Tourism Administration for comment, but did not receive a response.read more

The biggest deal so far was that of Chinese commerce platform Huitongda Network Co Ltd (9878.HK), which raised just $297 million in February.

“The low number of deals and the lack of large, high-profile IPOs has led investors to pay less attention to the IPO market, dampening investment appetite,” said Kenny Ng, securities strategist at Everbright International. rice field.

Dealmakers hope listings will pick up to mitigate what is otherwise expected to be Hong Kong’s slowest year since 2009.

DLA Piper partner Arthur Tso said, “We believe we may see some increase in IPO activity as we move into November and into next year.

“There seem to be a lot of deals waiting for the window to open as to when they can tap into the market, but we feel Q4 will be the most likely option for that to happen.”

Reported by Scott Murdoch, Hong Kong.Additional Reporting by Riddhima Talwani; Editing by Christopher Cushing

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