Hong Kong’s recovering stock market saw its first listing via a merger with a blank-check company plunge on its debut on Wednesday.
Singapore-based Synagistics, an e-commerce solutions provider, dropped by 15 percent to close its first-day trading at HK$17($2.2) in Hong Kong, after skyrocketing by over 400 percent in the morning session and then turning down way below the opening price of HK$20, albeit still above the offering price of HK$10.
The speculation sent the company’s shares on a roller-coaster ride, despite turnover remained relatively thin at HK$14 million.
ALSO READ: AI firm launches first IPO after listing reform for pre-revenue tech firms
The benchmark Hang Seng Index edged down by 1.55 percent, or 320.50 points, to 20,380.64 points on Wednesday, ending a three-day winning streak.
“There is naturally a lot of volatility and uncertainty around special-purpose acquisition companies (SPACs), which explains more stringent regulations put into place a while back to restrict eligibility for investing in SPACs to professional investors only, and setting up a volatility control mechanism,” said Lynn Song Lin, Hong Kong-based chief economist for Greater China at European bank ING.
READ MORE: PwC: HK's new listings volume poised to bounce back
Synagistics’ listing stands as the first “de-SPAC” since the stock exchange operator, Hong Kong Exchanges and Clearing, introduced a listing regime for SPACs in January 2022, in its quest for polishing the city’s brand as a listing venue and international financial center.
De-SPAC refers to a transaction that enables a company to go public by merging with a SPAC. Synagistics combined its business with HK Acquisition Corp, a SPAC formed by the former head of the Hong Kong Monetary Authority, Norman Chan Tak-lam, along with two family members of former Hong Kong Chief Executive Donald Tsang Yam-kuen.
IPOs aside, SPACs offer an alternative method for companies to go public, known for their advantages in flexibility, according to Song.
READ MORE: Hui: New investment program more attractive than Singapore's
“But SPAC and de-SPAC remains quite a niche field for now, which is understandable given it’s still pretty new in Hong Kong,” said Song, adding that the process may become more normalized and volatility may also gradually come down, should there be more successful cases ahead.
After several years of bleak IPO activity in Hong Kong, Song said he has noticed signs of improvement in the second half of this year and generally more interest from companies seeking listings via traditional channels or SPACs in the city, citing the high profile float of Chinese mainland appliance maker Midea Group.
Contact the writer at sophialuo@chinadailyhk.com
