Hong Kong Indices Fall Despite IPO Buzz

The Hong Kong stock market saw a recent wave of declines, marked by a substantial drop in its three major indices within the week from January 6 to January 10. As of the close last Friday, the Hang Seng Index had slipped by 3.52%, settling at 19,064.29 pointsMeanwhile, the Hang Seng Tech Index fell 3.23%, landing at 4,260.82 points, and the China Enterprises Index witnessed a 3.65% decrease, ending at 6,898.15 pointsThis downward trend was also reflected in a significant drop in daily trading volume, which decreased by 31.2% to around HKD 131 billion.

Analyzing the contributing factors to this volatility, analysts from DBS Bank, particularly Hugo Yang, cited increasing geopolitical risks, concerns surrounding the trajectory of the U.SFederal Reserve, and declining bond yields in mainland China as pivotal reasonsAdditionally, analysts noted that Hong Kong is presently in a policy vacuum, which could result in investor caution and a focus on watching market movements rather than making immediate investments

This cautious atmosphere is expected to persist in the coming weeks.

However, Yang indicated that there are glimmers of hope amidst the turmoilHe pointed out that after this market correction, valuations of Hong Kong stocks may become increasingly attractiveIf the upcoming Chinese New Year brings strong travel and consumption figures, it could form a foundation for a potential rebound in the stock market.

"In the short term, we recommend investors to maintain positions in high-yield defensive stocks, along with technology hardware sectors that are experiencing favorable trends," Yang advisedHe further emphasized that any sectors benefiting from fresh consumer policies may present opportunities for strategic investments during market dips.

In a more optimistic development on January 10, a company known for its building block toys, Blokus, drew significant attention on its debut in the Hong Kong Stock Exchange

• Solidifying the Foundation for Data Value Release
• The Biggest Benefactor of AI!
• Patient Capital in Fund Investing
• US Jobs Surge Drives Dollar to 110
• AI Fuels French E-commerce Growth

Dubbed the "Chinese version of Lego," Blokus saw its stock price soar by an impressive 81% during its opening, reaching HKD 109.73 per share, with its market capitalization soaring beyond HKD 26 billion at times.

Founded in 2014, Blokus has rapidly positioned itself as the largest building block toy manufacturer in China and the third largest globallyAccording to data from Frost & Sullivan, Blokus achieved approximately HKD 1.8 billion in Gross Merchandise Value (GMV) in 2023 while experiencing a staggering growth rate exceeding 170% year-on-year, making it one of the fastest-growing scaled toy companies worldwide.

The toy products from Blokus primarily fall into two categories: “building role-play toys” and “construction block toys,” boasting over 30 authorized intellectual properties (IPs) like Ultraman, Transformers, Naruto, Minions, Detective Conan, and Hello Kitty, culminating in 227 individual SKUs based on licensed IPs available for sale.

Investor interest in the Hong Kong IPO market remains robust, revealing a steady pace despite economic hurdles

As of early January 2025, a total of eight companies have filed for listing on the main board of the Hong Kong Stock Exchange, all hailing from mainland ChinaThis marks a significant uptick compared to the average monthly IPO filings throughout 2024.

In the previous week, five companies, including Brain Dynamics Aurora-B, Huije Environmental Protection, Conch Materials Technology, Newmans, and Blokus, successfully listed on the HKEX main board.

Moreover, a notable trend of A-share companies pursuing dual listings ("A+H") has emerged as wellFor instance, on January 6, Chinese pharmaceutical company Hansoh Pharmaceutical and Maiwei Biotechnology submitted their applications for listing on the Hong Kong Stock Exchange as they initiate their international ambitions.

Since December 30, 2024, a total of 17 enterprises—primarily from the biotech, consumer goods, and new materials sectors—have filed applications for listing in Hong Kong, injecting new vigor into the market

Industry insiders assert that a series of supportive policies from regulatory bodies in both mainland China and Hong Kong have bolstered the intentions of companies seeking to go public in Hong KongAdditionally, as the U.SFederal Reserve enters a cycle of interest rate cuts, various reform measures introduced by the HKEX aimed at enhancing market efficiency and liquidity further strengthen the foundation for a successful IPO market in 2025.

Reflecting on 2024, the Hong Kong new stock market went through a sluggish phase during the first three quarters but showcased a resurgence thereafter, leading to a more dynamic atmosphere by year’s endStatistics indicated that 70 companies listed on the Hong Kong Exchange in 2024, amassing a total fundraising amount of HKD 87.5 billion, which represents a remarkable 89% increase year-on-year, placing it back in fourth position globally for fundraising.

On the larger scale of IPOs, the Meidi Group’s H-share listing brought in an actual capital raise of HKD 35.6 billion, accounting for 40.64% of the overall funds raised through IPOs for the year, marking it as the largest new public offering in Hong Kong since 2021. Companies like SF Holding and Horizon Robotics also made headlines as they raised over HKD 5 billion through their respective IPOs.

To further attract more businesses to list in Hong Kong, the stock exchange has rolled out a series of initiatives, including lowering listing thresholds, creating specialized channels for technology firms, and streamlining the review process

In 2024, the market witnessed the listings of specialized tech firms like JingTai Holdings, Black Sesame Intelligence, and Yuejiang, thereby enriching the investment options available.

The Hong Kong Investment Promotion Agency anticipates that 2025 will see even more large enterprises choosing to list in Hong Kong, primarily due to the encouragement from the Securities and Futures Commission and the moderately relaxed monetary policy in mainland ChinaCoupled with Hong Kong's inherent advantages as a listing destination, this trend is set to continue enhancing the region's attractiveness to prospective companies.

In a stark contrast to the optimistic developments within the IPO landscape, the same week faced challenges as Sunac China Holdings experienced a significant plunge, declining nearly 15% to reach HKD 1.49 per share, with a trading volume of HKD 23.99 millionReports emerged that China Cinda (Hong Kong) Asset Management Company Limited has filed a petition for the winding-up of Sunac China, with a hearing scheduled for March 19.

Sunac China currently finds itself at a critical juncture in its second debt restructuring initiative

Your email address will not be published.Required fields are marked *