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HONG KONG – Hong Kong’s two largest completed IPOs in 2022 worth a combined $1.5 billion opened sharply lower on Thursday in their debut, dampening prospects for a pick-up in deal activity in the city for the rest of the year.
Shares in Chinese electric vehicle (EV) maker Zhejiang Leapmotor Technology opened at HK$41 ($5.22) each, down 14.5% from their IPO offer price of HK$48 .
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The stock later fell to HK$32.20.
Shares in Onewo Inc, the property services arm of developer China Vanke Co Ltd, fell more than 7% at the open from its IPO price of HK$49.35.
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Hong Kong’s Hang Seng Index opened nearly 2% higher.
Leapmotor raised $800 million, while Onewo raised $733 million from its initial public offerings (IPOs).
These are the largest IPOs completed in the city in 2022, where deal volumes have fallen sharply amid the COVID-19 slowdown, geopolitical tensions, rising inflation and higher interest rates in many parts of the world.
Lithium battery maker CALB is finalizing 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.
Refinitiv data shows that IPOs in the city have raised just $7.94 billion so far this year, the worst annual figure since 2012, compared with $37.1 billion for the same period in 2021.
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After those poor debuts, new major IPOs are unlikely before the end of 2022, traders said, as investors remain wary of global market volatility.
“Weak sentiment in the secondary market has not yet normalized,” Ke Yan, principal analyst at DZT Research, which publishes Smartkarma, told Reuters.
“The key issue for IPOs going forward in Hong Kong will be the tug-of-war between companies and investors on valuation, and this could go on for a long time.”
The Hang Seng index sank 3.4% on Wednesday, the most since May, to end at the lowest level in more than a decade, as rising borrowing costs intensified fears of a world recession
The index has lost roughly 25% in 2022, while the technology index is down 36.6%. ($1 = HK$7.8498) (Reporting by Scott Murdoch; Editing by Himani Sarkar)
