Leapmotor, Onewo shares open sharply lower in Hong Kong debut
29 September, 2022
Hong Kong's two largest completed IPOs of 2022 worth a combined $1.5 billion opened sharply lower in their debut on Thursday, dimming the outlook for a pick up in deal activity in the city for the rest of the year.
Shares of Chinese electric vehicle (EV) maker Zhejiang Leapmotor Technology opened at HK$41 ($5.22) apiece, down 14.5 per cent from the IPO offering price of HK$48.
The stock later plunged to as low as $HK32.20.
Shares of Onewo Inc, the property services arm of developer China Vanke Co Ltd, fell more than 7 per cent at open from their IPO price HK$49.35.
Hong Kong's Hang Seng Index opened nearly 2 per cent higher.
Leapmotor raised $800 million, while Onewo raised $733 million from their initial public offerings(IPOs).
These are the largest completed IPOs in the city in 2022 where deal volumes have fallen sharply amid COVID-19 curbs, geopolitical tensions, surging inflation and higher interest rates in many parts of the world. Lithium battery maker CALB is finalising its $1.28 billion Hong Kong IPO and has priced its shares at HK$38 each, according to two sources with direct knowledge of the matter.
CALB did not immediately respond to a request for comment.
IPOs in the city have raised only $7.94 billion so far this year, worst annual number since 2012, versus $37.1 billion during the same period in 2021, Refinitiv data shows.
POOR DEBUTS DENT SENTIMENT
After these poor debuts, it is unlikely there will be any new major IPOs before the end of 2022, dealmakers said, as investors remain cautious given the global market volatility.
"Weak sentiment in the secondary market has not normalised yet," Ke Yan, lead analyst at DZT Research, who publishes on Smartkarma, told Reuters.
"The key issue for IPOs in the future in Hong Kong will be the tug of war between companies and investors in respect to valuation, and that could last for a long time."
Leapmotor and Onewo IPOs received a lukewarm response from the city's retail investors who did not take up the full amount of shares offered to them, according to the firms' filings.
The EV maker had planned to raise up to $1.5 billion, sources told Reuters, but later scaled that back to $1 billion.
Leapmotor shares were priced at the low end of its marketed range, while Onewo shares were priced at the mid point of its indicated price range.
The Hang Seng Index sank 3.4 per cent on Wednesday, the most since May, to end at the lowest level in over a decade as rising borrowing costs intensified fears of a global recession.
The index has lost about 25 per cent in 2022, while the tech index has shed 36.6 per cent.
Source: www.channelnewsasia.com
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