War in the Middle East weighed on the market debuts of three Hong Kong listings on Monday that had hoped to ride a wave of momentum for share sales in the city this year.
Shenzhen Zhaowei Machinery & Electronics, Estun Automation and Alsco Pooling Service are the first Hong Kong share listings since the conflict broke out at the end of last month.
Of the three, Zhaowei fared best, with shares in the micro-drive provider rising about 4% from its offer price of HK$71.28 ($9.12). Its initial public offering priced the stock well below its maximum offer price of HK$73.68.
Industrial robot maker Estun dropped around 14% after pricing at the bottom of its offer range. Reusable packaging service provider Alsco saw its shares tumble 40% after also pricing at the bottom of its IPO range.
Alsco’s retail tranche was oversubscribed more than 5,000 times, but that did not shield the stock from a sharp first-day selloff as investors took profits amid the jump in oil prices and broader macro jitters, said Dickie Wong, executive director of research at uSMART Securities.
“This highlights a fragile market environment right now,” he said.
“Upcoming IPOs could face heightened volatility, subdued openings or even deeper dives unless oil prices and geopolitical tensions ease and the Hang Seng Index stages a meaningful rebound.”
Hong Kong has had the strongest start to a year for share sales since 2021, with IPOs and secondary listings in January raising around $5.5 billion, LSEG data showed.
A wave of Chinese companies planned to come to market after last month’s Lunar New Year holiday, but have been faced by souring investor sentiment as the Middle East war sent oil prices surging and stoked worries about a hit to global growth.
In a research note on Monday, CICC said Hong Kong equities were likely to be more volatile than mainland China’s A shares in any oil-driven risk-off move, but warned prolonged high oil prices would still hurt China’s economy.
The three companies raised a combined HK$3.62 billion in share sales last week.
Zhaowei raised the bulk of that at HK$1.91 billion, after launching its offer on February 27, a day before the war broke out.
The company, which is already listed in Shenzhen, has said proceeds will be used for research and development and for capacity expansion, among other purposes.
Estun raised HK$1.49 billion in its Hong Kong share sale, while Alsco raised HK$223.7 million.
Investor caution has also been evident elsewhere in the region. In Seoul, online lender K Bank ended only slightly above its IPO price on its debut last Thursday, and by Monday shares were down 16% from its IPO price.
The Hong Kong pipeline continues this week with MeiG Smart Technology scheduled to list on Tuesday after setting its offer price at the maximum HK$28.86.
Elsewhere in Asia, Singapore’s UI Boustead REIT is scheduled to begin trading on Thursday on the domestic bourse, while Malaysia’s Sunway Healthcare is set to list on Bursa Malaysia on March 18.
($1 = 7.8152 Hong Kong dollars)
Reuters
