Hong Kong jeweller, data-provider listing debuts give market whiff of optimism

Strong debuts by a jewellery retailer and a data services provider on the Hong Kong stock exchange have brought cheer to the new issue market, as the city looks to restore its glorious past when it was the world's top IPO destination for seven of the past 15 years.

Laopu Gold's shares surged as much as 86.7 per cent, before surrendering gains to close 73 per cent higher from its offer price of HK$40.5 on its first day of trading on Friday, making it one of the best listing day performances this year, Bloomberg data shows. It raised HK$905.94 million via its IPO, which was 582 times oversubscribed among local investors, according to a filing.

Tianju Dihe, an information company which has e-commerce giant JD.com as an early backer, saw its shares jump as much as 40.7 per cent from its IPO price of HK$83.33. The stock, however closed sharply lower at HK$60.15. It raked in HK$401.5 million after its IPO was oversubscribed 602 times, a filing showed.

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The broader Hong Kong market ended flat. Both deals were solely sponsored by Citic Securities.

"The appetite for IPOs is recovering, and I think there's a chance for sentiment to return to 2020 levels before Ant Group's IPO cancellation," said George Au, deputy sales director at Phillip Securities. Better IPO share performances have been encouraging more investors to look at this market, while the FINI scheme is also helping demand, he added.

The Fast Interface for New Issuance (FINI) platform, launched by the HKEX late last year, shortened the settlement cycle to two days from five. The shorter window for offering, pricing and listing, has resulted in lower risks for issuers and investors, helping boost IPO performances even in volatile markets, Au said.

A total of 27 companies raised US$1.5 billion on the main board of the Hong Kong stock exchange in the first six months of 2024, according to the LSEG data released on Friday. It was the lowest total in two decades, and pushed the city to 13th spot in a global ranking of IPO centres.

But the rising tide did not lift all boats. Friday's third debutante, ride-hailing app operator Dida slipped. Dida, which raised the smallest amount of the three, saw its shares fall 22.5 per cent on its first day of trading. Dida's shares were priced in the middle of the offer price range at HK$6.00, and raised HK$269.73 million with an oversubscription of 112.90 times. CICC, Haitong, and Nomura were the joint sponsors.

The largely upbeat performance on Friday is adding fresh momentum to the city's IPO market, which has been struggling to find its footing amid a sluggish secondary stock market and against the backdrop of China's slowing economy.

Nine out of the 14 new listings since May jumped on the first trading day, a sharp contrast with the previous month when almost all the deals slumped below the offer price, Bloomberg data shows.

The coming months will be more vibrant, especially with stronger support from Beijing for mainland companies to list in Hong Kong, the city's finance chief said.

"At the moment, in the pipeline, IPOs coming to Hong Kong are very strong," Financial Secretary Paul Chan Mo-po said in an interview with the Post. "We do think that in the second half of this year, particularly from the third quarter, you will be able to witness more substantial IPOs coming here for listing."

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