Latest Hong Kong listing hits another debut record

Hong Kong

AN engineering services company that raised just US$16 million in its Hong Kong initial public offering soared 186 per cent on the first day of trading, making it the best debut in the city this year.

The performance of Macau E&M Holding's shares, which jumped as much as 255 per cent intraday, is the best since Chen Lin Education Group Holdings closed 193 per cent higher than its offer price in November 2019.

IPOs in Hong Kong have seen a surge in investor demand in the last few months, fuelled by abundant market liquidity thanks to central banks' efforts to soften the economic damage wrought by the coronavirus pandemic.

A Chinese bottled water giant earlier this week took the crown for being Hong Kong's hottest IPO among retail investors, with some US$87 billion in orders, representing 1,148 times the shares on offer. The overwhelming response highlighted just how hot the IPO market has become, with a consumer name attracting the level of investor interest that would normally be associated with hot tech or biotech names.

Since the start of June, which has seen a flurry of listings after Chinese tech giants JD.com and NetEase raised billions of dollars in share sales in the city, IPOs have closed an average 20 per cent above their offer prices on their first day of trading, according to data compiled by Bloomberg.

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That is more than the average gain since the start of the year, which stands at 12 per cent.

Even companies that raised over US$1 billion - which usually don't have such eye-popping debuts - have been staging impressive debuts.

Nongfu Spring Co, the bottled water giant, rose as much as 85 per cent on its first day and closed 54 per cent above its IPO price. That was the city's fourth-best performance on record among firms that raised more than US$1 billion.

Still, soggy debuts do happen. Yum China Holdings, the operator of KFC, Pizza Hut and Taco Bell restaurants in China, closed 5.3 per cent lower on Thursday after raising US$2.2 billion. It was the worst stock debut among billion-dollar listings in the city in more than a year. BLOOMBERG