China Galaxy Securities Co Ltd rose as much as 11.3 percent in its trading debut on Wednesday after raising $1.1 billion in a Hong Kong IPO, underscoring a surge in retail investors' demand for new listings in the city.
The debut of China's seventh-biggest brokerage, and that of Sinopec Engineering (Group) Co Ltd on Thursday, will be bellwethers for a slew of Hong Kong offerings in the coming weeks.
China Galaxy shares jumped to HK$5.78 shortly after opening and traded as high as HK$5.90, up from the IPO price of HK$5.30 per share. The benchmark Hang Seng index was little changed at 0504 GMT.
Trading in Hong Kong's securities and derivatives markets was delayed on Wednesday because of a severe rainstorm warning, pushing back China Galaxy's debut to the early afternoon. China Galaxy priced its $1.1 billion initial public offering near the bottom of an indicative range of HK$4.99-HK$6.77 per share last week. The IPO was the second biggest in Hong Kong this year, behind Sinopec Engineering's $1.8 billion listing, also last week.
Demand from retail investors was nearly 30 times the number of shares on offer, with the institutional tranche of the IPO "significantly over-subscribed," China Galaxy said in a filing on Tuesday. The China Galaxy and Sinopec Engineering deals underscore a pick-up in activity after IPO issuance in Asia ex-Japan plunged 56 percent to $3.3 billion in the first quarter. That was the worst start to a year for new share listings since the first quarter of 2009, according to Thomson Reuters data.
After being the global IPO hub for several years, the city had $7.72 billion worth of deals in 2012, its lowest volume since the 2008 global financial meltdown. The brokerage is controlled by Galaxy Financial Holdings, which is owned by Central Huijin, a unit of sovereign wealth fund China Investment Corp. China Galaxy's IPO secured commitments for $360 million worth of shares from seven investors including Malaysian sovereign wealth fund Khazanah Nasional, insurers AIA Group and Sino Life Insurance, and a unit of Sinopec Group.
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