This July 25, 2019 photo shows the skyline featuring financial buildings in Hong Kong. (PAUL YEUNG / BLOOMBERG)

One of Hong Kong’s most-popular initial public offerings among retail investors debuted softly, pouring cold water on the city’s red-hot sentiment over new listings.

Joy Spreader Interactive Technology Ltd, a Hong Kong-based online marketing firm, closed Wednesday down 6.3 percent and at its worst level for the day on Wednesday morning before entering the midday break at its HK$2.88 offer price. It’s the first Hong Kong IPO to drop in its first day of trading after raising more than US$100 million and having a retail oversubscription rate above 1,000, according to data compiled by Bloomberg. 

Joy Spreader sold HK$1.57 billion (US$202 million) of stock, with the price toward the higher end of expectations

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Joy Spreader sold HK$1.57 billion (US$202 million) of stock, priced toward the higher end of expectations.

The company’s IPO was the third most sought-after in Hong Kong this year by retail investors, with orders for more than 1,600 times the shares originally offered to the group. Its sluggish performance is a sharp contrast to previous listings that saw similar popularity this year, including the 152 percent surge in July for Ocumension Therapeutics and 54 percent jump for Nongfu Spring Co earlier this month.

Joy Spreader’s initial performance adds to signs that sentiment for new Hong Kong offerings is cooling. 

The city’s equities market has been falling of late amid Sino-US tensions and investors apparently saving cash for next month’s anticipated debut of Ant Group Co. Fulu Holdings Ltd, whose retail oversubscription rate also topped 1,000, rose 3.2 percent in its Sept 18 debut while Yum China Holdings Inc earlier this month recorded the worst stock debut in more than a year among billion-dollar listings in Hong Kong.

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“I think the IPO market has cooled down a bit and clients are turning more conservative,” said Alvin Cheung, associate director at Prudential Brokerage Ltd. “I believe Joy Spreader’s performance reflects recent market sentiment.”

Joy Spreader was backed by cornerstone investors including Acuitas Group Holdings LLC and Capital Investment LLC, a sign usually seen by retail investors as a vote of confidence in a company.

New offerings have been particularly popular with Hong Kong retail investors this year, as ample liquidity encouraged banks to lend and more technology firms list in the city, spurred by restrictions imposed on some in the US. Seven of the 10 best IPO debuts in Hong Kong in the past decade took place this year, based on deals that raised more than US$100 million, according to data compiled by Bloomberg.

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