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Tuesday, October 27, 2020, 20:30
Experts: Ant's IPO to enhance HK's fundraising reputation
By Luo Weiteng in Hong Kong
Tuesday, October 27, 2020, 20:30 By Luo Weiteng in Hong Kong

In this Oct 23, 2020, photo, an employee walks past a logo of the Ant Group at their office in Hong Kong. (KIN CHEUNG/AP)

As Ant Group’s mega listing becomes Hong Kong’s latest in another bumper year for IPOs in the city, Asia’s financial center appears set to boost its reputation as the world’s leading fundraising venue, financial experts said.

The Chinese mainland fintech giant, which began life as a payment service on Alibaba-owned Taobao in 2003, opened the retail book on Tuesday for its dual listings in Hong Kong and Shanghai, marking the final step in a process that paves the way for the world’s largest-ever IPO.

“Once again, Ant Group’s listing cements Hong Kong’s role as a magnet for promising companies to raise funds,” said Charles Li Xiaojia, outgoing chief executive of bourse operator Hong Kong Exchanges and Clearing Ltd.

READ MORE: Jack Ma's Ant said to close HK IPO books early as demand soars

Just one year earlier, Alibaba made its US$25 billion Hong Kong debut in a secondary offering. The blockbuster float, which Alibaba CEO Zhang Yong described as a “homecoming”, represented a vote of confidence in the city in the midst of months of violent street protests and helped Hong Kong reclaim the crown as the world’s leading IPO fundraising venue in a turbulent 2019.

Once again, Ant Group’s listing cements Hong Kong’s role as a magnet for promising companies to raise funds

 Charles Li Xiaojia, outgoing chief executive, HKEx

This year, despite the coronavirus pandemic, escalating Sino-US tensions and a global economic slowdown, “Ant Group’s float is definitely the focus of Hong Kong’s capital market and a citywide grand event,” said Chan Yan-chong, adjunct professor at the City University of Hong Kong.

In the first three quarters of 2020, total capital raised via listings in Hong Kong reached HK$213.8 billion (US$27.59 billion), representing a year-on-year rally of 67 percent. Accounting firm Deloitte projected the city will shoot ahead of the Nasdaq Stock Market in the global IPO league table for the whole year, second only to the Shanghai Stock Exchange.

Raymond Yeung, chief economist of Greater China at ANZ Bank, said that as more Chinese mainland companies join the IPO spree in the city, the rapid development of Hong Kong’s capital market will attract more capital inflows and continue to drive high demand for the Hong Kong dollar.

“It’s just the beginning. We expect the Hong Kong dollar will keep strengthening for quite a long time,” said Yeung.

As of July 30, drawn in by a series of high-profile floats and comparatively high interest rates, more than HK$109 billion of capital had rushed into the city since April, as investors and companies seek greener pastures in Hong Kong.

Large capital inflows have pushed the pegged Hong Kong dollar all the way to the strong end of its permitted trading band against the greenback. As of Oct 13, the Hong Kong Monetary Authority has sold HK$230.6 billion in interventions so far this year, more than it did in any full year since the global financial crisis of 2009, in a bid to keep the currency from strengthening.

Earlier this year, Guangzhou-based gaming giant NetEase and Beijing-based e-commerce behemoth JD beat a path to a secondary listing in Hong Kong.

The pair of listings rank among the top five floats worldwide over the first nine months in terms of funds raised, essentially lifting the curtain on a fundraising spree in Hong Kong.

As Ant Group makes its US$34.4 billion Shanghai and Hong Kong debuts, a combined listing that eclipses Saudi Aramco US$29 billion IPO last year, more mega listings are expected to follow suit in the remaining months. This may include the much-awaited deals from Chinese mainland detergent-maker Blue Moon and digital drug retailer JD Health.

“I think Hong Kong’s advantages are always there. This year, Chinese mainland companies just get a chance to take a new look at the city’s role as a go-to destination for fundraising, against the backdrop of the geopolitical storms and other challenges,” said Jasper Yip, a principal in the financial services practice in Oliver Wyman’s Hong Kong office.

ALSO READ: Ant IPO by the numbers: It’s bigger than Finland’s GDP

Alibaba founder Jack Ma Yun told the Bund Summit in Shanghai on Saturday: “This was the first time such a big listing, the largest in human history, was priced outside New York City. We wouldn’t have dared to think about it five years, or even three years ago.”

The company plans to stop taking institutional investor orders a day earlier on Wednesday for the Hong Kong leg of its highly sought-after IPO as the demand is so high, according to Bloomberg News, citing a market source.

The Hangzhou-based firm has priced its Hong Kong stock at HK$80 per share, with minimum investment set at HK$4,040.31, including the commission fee and stamp tax, for a board lot of 50 shares. The company is scheduled to make its debut in Shanghai and Hong Kong on Nov 5.

The benchmark Hang Seng Index edged down 0.53 percent, or 131.59 points, to close at 24787.19 points on Tuesday.

Share price of Alibaba in Hong Kong edged up 0.67 percent on Tuesday to close at HK$300.00.

 

sophia@chinadailyhk.com


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