Strong investor enthusiasm and substantial capital inflows have resulted in exceptional initial public offering (IPO) performances in Hong Kong this year. Auntea Jenny, a Chinese bubble tea chain, saw its stock surge as much as 75 percent on its debut day, closing 40 percent higher than its IPO price of HK$113.12. The broader Hang Seng Index rose by 0.4 percent in response. This followed a remarkable 38.3 percent gain by Breton Technology, which is backed by Chinese electric vehicle maker Xpeng. In March, Duality Biotherapeutics rose 116.7 percent, and Mixue Group, China’s largest fresh drinks chain, added 43.2 percent on its first day of trading.
The performance of IPOs is largely influenced by the companies’ fundamentals, but the stock market has recently been buoyed by strong capital inflows from global and mainland investors. Edward Au, managing partner at Deloitte China, attributed this inflow to renewed global interest in China-related opportunities, particularly in the fields of artificial intelligence and innovation. He noted that mainland Chinese investors have increasingly participated in the Hong Kong stock market as they expand their offshore investment portfolios. While geopolitical tensions could create volatility, the ample liquidity is expected to support a more active environment for capital-raising.
Auntea Jenny’s strong debut can be attributed to its business strategy and the growing share price of Chinese tea companies. The company raised HK$272.8 million (US$35 million) from its IPO, selling 2.4 million shares at the top of its price range. Retail investors in Hong Kong placed orders for nearly 3,617 times the shares available to them, with global funds bidding 2.57 times. The company plans to use the proceeds from the IPO to enhance its digital and supply chain capabilities, improve ingredient quality, and expand its store network.
Auntea Jenny is the third mainland tea brand to list in Hong Kong this year, following Mixue’s HK$3.45 billion listing in March and Guming Holdings’ HK$1.8 billion share sale in February. Despite some fluctuations in debut performances, such as Guming’s 6.4 percent drop, it has since risen by 173.1 percent. The average first-day return for new Hong Kong stocks this year stands at 42.5 percent, significantly higher than the 27.7 percent return last year. Mainland China’s regulatory support continues to fuel market optimism, further boosting the liquidity and sentiment surrounding IPOs.
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