- The six initial public offerings raised a total of HK$4.4 billion (US$563.5 million), the biggest being Shanghai-based developer Zhongliang that raised HK$2.94 billion
- The Hong Kong stock exchange has seen three listing cancellations since June 13 as confidence has been rattled by unprecedented political turmoil
Six companies debuted on the Hong Kong stock exchange on Tuesday, marking the busiest initial trading day for a bourse that is trying to claw back its global fundraising crown from New York city.
The six initial public offerings (IPOs) raised a total of HK$4.4 billion (US$563.3 million) in Hong Kong, raising the city's fundraising tally to almost HK$74 billion so far for the year, lagging behind the amount of capital raised on the Nasdaq and the New York Stock Exchange in the world's top two spots.
Still, the bumper day is a much-needed boost for Hong Kong Exchanges & Clearing Limited (HKEX), the operator of Asia's second-largest capital market, after ESR Cayman and Budweiser Brewing Company APAC cancelled their fundraising within a month, knocking a combined US$11.05 billion off the tally and setting back Hong Kong's attempt to reclaim the IPO crown for a second straight year.
Sentiments had been downbeat in Hong Kong, squeezed by the year-long US-China trade war between the world's two largest economies, and rattled by massive rallies involving tens of thousands of protesters, almost a month after 2 million people took to the streets to oppose a controversial extradition bill that has been declared by its drafter to be "dead."
"Hong Kong won many gold medals in the IPO market worldwide last decade; sometimes we get the silver, and sometimes the copper," said Charles Li Xiaojia, chief executive of the HKEX, during a listing ceremony at the exchange. "The most important things is to do our best to attract companies around the world to list here."
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The initial trading was marked by the sounding of a ceremonial cymbal called the gong. The centre stage at the exchange was not large enough to accommodate six gongs at a time, so the debuting companies had to share the honours, with two companies sharing each instrument.
Kelfred Holdings, Contel Technology Company, Platt Nera International, Zhongliang Holdings Group, Edvantage Group Holdings and Kimou Environmental Holding banged the gong today @HKEXGroup pic.twitter.com/74eYzo7orM
" Joy Pamnani (@joypamnani) July 16, 2019
Seven companies were initially scheduled to mark their trading debuts, but Singaporean construction company WMCH Global Investment said on Sunday that it was postponing its US$8.64 million offering on Hong Kong's GEM, a day after Budweiser scrapped what would have been the world's biggest IPO this year.
"We are disappointed (with Budweiser's withdrawal) as this was a very big item, but we respect the decision of the issuers," Li said. "Hong Kong's IPO market remains robust and strong, as (shown by the' six IPO debuts today."
The six companies that listed today were involved in a range of businesses, from education to property development and computer services. The biggest of the six was Shanghai-based developer Zhongliang Holdings Group, with its HK$2.94 billion IPO. The stock opened unchanged from its IPO price of HK$5.55.
Gains were also seen in the trading debuts by Kelfred Holdings, software developer Contel Technology, server provider Platt Nera International, and electroplating industrial park operator Kimou Environmental Holding Limited. Edvantage Group Holdings, which operates private schools, was unchanged in its trading debut.
Hong Kong had claimed the top spot in the world's IPO league table six times in the past decade, but lost its crown to New York Stock Exchange and the Nasdaq in the first half of this year, due to a lack of blockbuster IPOs.
Hong Kong's main board saw IPOs worth US$8.86 billion in the first half of this year, well behind New York on US$17.45 billion and Nasdaq on US$14.4 billion.
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The key for Hong Kong to climb back to the top, brokers said, would very much depend on New York-listed e-commerce giant Alibaba Group Holding going ahead with its secondary listing this year. Alibaba, which owns South China Morning Post, yesterday received shareholders' approval for a 1-to-8 stock split, seen as the first step in a secondary listing that can take place in Hong Kong. The company has engaged bankers to work on a plan to raise as much as US$20 billion, Bloomberg reported in May.
Hong Kong's market operator and the securities regulator pushed through the biggest amendments to their listing regulations in three decades last year, allowing technology start-ups with multiple classes of shares and pre-revenue biotechnology laboratories to raise capital in the city.
The reform has attracted many new listings but the bourse now has to overcome a downbeat mood, as more than a month of street protests continued to dampen sentiments.
"Some international investors have discussed their concerns with the recent violence" that has befallen Hong Kong, Li said. "We want to assure international investors to not worry, and to continue investing in Hong Kong. We are all feeling the pain, seeing the recent violence, which is not part of Hong Kong's DNA. We want to show that world that Hong Kong is free, peaceful and tolerant."
Additional reporting by Joy Pamnani
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