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Home / Business / Investors cool down a bit on the Big Hong Kong IPO

Investors cool down a bit on the Big Hong Kong IPO



The global troubles of tech stocks and tensions between the US and China may have been one of the hottest IPOs in Hong Kong, with the excitement of what might be said:

Ping An insurance
Co.


601318 -3.56%

of China Ltd.'s sale of part of its health and technology department

"Demand is strong, but not so strong what was expected to be a record, "said

Alvin Cheng

at Prudential Brokerage, also cites the shutdown of US components for Chinese telecom equipment companies

ZTE
Corp.


ZTCOY -15.37%

The online health platform ping-an-unit operator, Good Doctor, is selling $ 1.12 billion of shares in the city's largest IPO this year. The insurer's tech holdings were a major driver as the Hong Kong-listed stock of the parent company doubled last year.

The international offering of the IPO is heavily oversubscribed, with more than 450 institutional investors looking for stocks on the term sheet. And, according to local brokers, the retail share has attracted more than $ 376 billion ($ 47.94 billion) in Hong Kong dollars. This is more than 650 times what was originally provided to domestic investors. The final figures will be published in the pricing process. The trade is scheduled to start on Friday.

But there are nearly 500 billion Hong Kong dollars or orders received before the IPO of China Literature Ltd., the country's largest reading platform

Tencent Holdings
Ltd.

Ping An Healthcare and Technology Co. sells 160 million shares or a 15% interest, with Ping An holding 38%. The shares are said to be trading at HK $ 54.80, the high announced last week, according to a Wall Street Journal team. That would bring its market value to HK $ 58.5 billion.

While Ample Capital Director

Alex Wong

expecting a strong rally on day one, given the big gains that have been made in recent Hong Kong IPOs and what he considers a limited supply of stocks, he sees no sustainable gains. He predicts investors will follow a hit-and-run approach.

Earlier this year, several small IPOs – who raised around $ 100 million – ended their first day at three times the offer price or higher. But many of these profits have since been returned. Even China literature, which nearly doubled on its first day of trading in November, has fallen 38% since its first day of trading and was 16% above the IPO price on Monday.

The IPO Ping An will take place as soon as the rules change at Hong Kong Exchanges and Clearing Ltd., the IPOs of still-private technology companies such as Chinese smartphone maker Xiaomi Corp.

Alibaba Group Holding
Ltd.

Ant financial. Stock markets around the world are looking for a pair of countries whose market values ​​could exceed $ 100 billion each. If the initial price gains decrease, this could be a problem for companies when it comes to thinking about where to list them.

Arthur Lui,

an experienced retail investor in his 50s, will be among the quick sellers when he lands shares of Ping An Healthcare. He points to the recent IPOs in Hong Kong, including online insurer ZhongAn Online P & C Insurance Co. and China's largest online auto retailer,

Yixin group
Ltd.

Both are currently below their IPO price. Lewis Wan,

Chief Investment Officer of the Pride Investments Group, sees longer-term potential: Ping An Healthcare offers "a good story for investors wishing to bet on China's fast-growing healthcare sector" as the population ages, and will benefit massively from Ping An's network and customer base . "

At the end of 2017, Ping An Healthcare had 192.8 million registered users who purchased online consultations and health care products. Many in China are worried about counterfeit medicines and the platform is considered a more reliable source.

While revenue is growing rapidly – more than doubling and tripling in 2016 – costs are rising even faster. The company reported a loss of 1 billion yuan ($ 158 million) in 2017 compared to 323.7 million yuan in 2015.

Citigroup

and

JP Morgan

are the joint global coordinators of the agreement.

Write to Joanne Chiu at joanne.chiu@wsj.com


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