Initial public offerings (IPOs) in Hong Kong have suffered one of the worst starts to the year in a decade as a coronavirus epidemic threatens to dry up the pipeline.
The 20 companies that listed in the territory last month have fallen an average of 16 percent from their offer prices and only three are trading above them, data as of Thursday compiled by Bloomberg showed.
In their first week of trading, they dropped by an average of 6 percent, making it one of the worst first-week performances of the past decade for the period.
Newly listed companies did worse than that only last year.
Stocks in Asia have been battered by a 2019 novel coronavirus epidemic, with Hong Kong’s Hang Seng reversing all the gains it made in a rally before the Lunar New Year holiday that had prompted a spree of share sales by companies and shareholders.
The lackluster performances of IPOs in Hong Kong came amid one of the busiest starts to the year in the past decade.
The only other time more companies listed in January was in 2018, with 25 companies completing IPOs.
One of the outliers this month was Chinese eatery chain operator Jiumaojiu International Holdings Ltd (九毛九), which has jumped 29 percent from its offer price and staged a hugely successful IPO in which the retail portion was 638-times oversubscribed.
Still, the stock market slump and uncertainty caused by the outbreak are likely to dry up the pipeline, at least temporarily.
With many flights to China canceled, employees made to work from home and recommendations to curb work meetings, completing an IPO would be a far from smooth process.
Singaporean taxi operator Trans-cab Services Pte (得運德士服務) has already halted work on its second attempt to list as a result of the virus.
Chinese biotech firm InnoCare Pharma Ltd (諾誠健華) has decided to postpone investor meetings to gauge demand for its Hong Kong listing, people familiar with the matter said earlier this week.
InnoCare had originally planned to start gauging demand next week, said the people, who declined to be identified as the information is private.
The widening coronavirus outbreak, which has killed more than 200 and sickened thousands, caused the company to put the plan on hold, the people said.
The company had been planning to raise about US$250 million from the IPO, Bloomberg News reported last year.
An external representative for the company declined to comment.
The decision, which could potentially delay the share sale, is another sign of the far-reaching effects of the epidemic and does not bode well for other companies sitting in the pipeline.
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