After a dismal first six months of the year, things are looking up for initial public offerings (IPOs) in Hong Kong as several large Chinese firms line up to list in the territory in the second half.
Battery materials producer Tianqi Lithium Corp (天齊鋰業) just opened its books for what is set to be Hong Kong’s first debut of the year that is expected to raise more than US$1 billion, while China Tourism Group Duty Free Corp (中國旅遊集團中免) might relaunch an offering of about US$2 billion.
Along with several other medium-size to large deals in the pipeline, they are poised to revive a dormant market in which firms raised a paltry US$2.6 billion between January and last month. That was a 92 percent slump from the same period last year and the lowest sum for the first half of a year since 2009.
Photo: Bloomberg
The pickup in upcoming listings speaks of an improving environment for valuations as the easing of COVID-19-related curbs and Beijing’s dialing back on a corporate crackdown spur a world-beating rally in stocks in China and Hong Kong.
Better clarity on rules for Chinese share offerings abroad could also “encourage more new listings” in Hong Kong, Credit Suisse Group AG analyst Charles Zhou (周成) wrote in a note last month.
The flow of positive news from China has propelled the benchmark CSI 300 Index toward a technical bull market, and analysts are expecting more constructive policy reinforcements in the second half of the year.
“If it happens, that would hopefully help to push through some of our pipeline of equity deals that are waiting for a better market window to open,” said Selina Cheung (張倩嘉), cohead of Asia equity capital markets at UBS AG in Hong Kong.
In the first half, Hong Kong saw only one IPO that was larger than US$500 million — in January. The majority of companies that have debuted this year are trading below water.
Notably, IPO activity has dried up globally as investors fret over inflation, hawkish central banks and recession fears.
Hong Kong’s dry spell now looks set to end with a flurry of smaller deals coming through late last month, as issuers hurried to take advantage of a short window favoring Chinese equities.
Tianqi Lithium’s potential US$1.7 billion listing paves the way for this month to be the strongest month for IPOs in Hong Kong this year. The pipeline of offerings of about US$500 million or more also includes snack maker Weilong Delicious Global Holdings Ltd (衛龍美味全球控股) and Wego Blood Purification (威高血液淨化), a dialysis unit of China’s Wego Group (威高集團).
China’s Imeik Technology Development Co (愛美客技術發展), which has a market cap of US$19 billion, has also filed for a listing on the Hong Kong Stock Exchange.
Many of the potential listings are already trading in New York, but are trying to tap investors closer to home due to fears of being kicked out by China’s financial watchdog due to a regulatory impasse with the US. Such is the case for consumer goods retailer Miniso Group Holding Ltd (名創優品集團控股), which is seeking up to US$116 million.
Others have opted to go public in Asia by way of introduction, a mechanism that does not involve selling new shares.
A number of companies have “continuously” worked on their listing plans as they wait for a market window to reach ideal valuations, China International Capital Corp (中國國際金融) equity capital market head Shi Qi (施琦) said. “Looking ahead, companies related to stable growth policies and social wellbeing could see better opportunities in the market,” she said, citing themes like carbon neutrality, environmental governance, new energy, consumption and healthcare.
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
Sales RecORD: Hon Hai’s consolidated sales rose by about 20 percent last quarter, while Largan, another Apple supplier, saw quarterly sales increase by 17 percent IPhone assembler Hon Hai Precision Industry Co (鴻海精密) on Saturday reported its highest-ever quarterly sales for the third quarter on the back of solid global demand for artificial intelligence (AI) servers. Hon Hai, also known as Foxconn Technology Group (富士康科技集團) globally, said it posted NT$1.85 trillion (US$57.93 billion) in consolidated sales in the July-to-September quarter, up 19.46 percent from the previous quarter and up 20.15 percent from a year earlier. The figure beat the previous third-quarter high of NT$1.74 trillion recorded in 2022, company data showed. Due to rising demand for AI, Hon Hai said its cloud and networking division enjoyed strong sales
Protectionism: US trade chief Katherine Tai said the hikes would help to counter unfair trade practices from China, while boosting domestic clean energy investments US Trade Representative Katherine Tai (戴琪) defended stiff tariff hikes against countries such as China, saying that paired with investment, they were a “legitimate and constructive” tool for reinvigorating domestic industries. Tai’s comments come a week after sharp tariff increases on Chinese electric vehicles (EVs), EV batteries and solar cells took effect — with levies down the line on other products also recently finalized. The latest moves targeting US$18 billion in Chinese goods come weeks before next month’s US presidential election, with Democrats and Republicans pushing a hard line on China as competition between Washington and Beijing intensifies. In an interview on Thursday
RSS