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April 12, 2017

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Lukewarm debut for Guotai’s IPO in HK

GUOTAI Junan Securities Co, China’s third-largest brokerage by assets, made a lukewarm debut in Hong Kong yesterday, reflecting a wary attitude from investors for an industry with lingering profit pressures.

Shares closed flat at the same level as its initial public offering price of HK$15.84 (US$2.04). The price fell below its issue price twice during the intraday trading.

“We are satisfied with the company’s debut performance, and believe the price will be fully reflected in the Hong Kong market in trading,” Reuters quoted Guotai’s Chairman Yang Dehong, as saying.

Concerns over volatility in China’s equity markets and a smaller-than-expected discount to the price of its Shanghai-listed stock curtailed demand for the deal, particularly from retail investors, analysts said.

The brokerage, also listed in Shanghai, tapped HK$16.5 billion in its Hong Kong IPO, the biggest in Hong Kong this year. Its float also was the second-largest globally this year, behind the US$3.9 billion IPO of Snap in the US.

Around 15 percent of the funds raised in its Hong Kong IPO will be used to grow the brokerage’s international business this year, documents showed.


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