Capital Markets

China Tourism Shares Fall 24% Before Rebound in Hong Kong

 

China Tourism Group Duty Free Corp shares plunged 24% at the opening of the company’s Hong Kong debut on Thursday – but then rallied to close flat at its offer price.

China Tourism is a major duty-free network operator in mainland China, with 200 duty free stores in China, Hong Kong, Macau and Cambodia.

The company’s debut was delayed until 0500 GMT after the Hong Kong Stock Exchange trading session was shortened because of a typhoon.

The stock opened at HK$120, before recovering to close at its offering price of $HK158.

This was the largest share sale in the city in 2022 and raised $2.1 billion for the group. And that may have help boost the mood, as Hong Kong’s benchmark Hang Seng Index gained 3.5% on Thursday.

Trading was buoyed by Beijing’s fresh economic stimulus measures and a pause in the yuan’s slide.

Refinitiv data showed 6.7 million China Tourism shares, worth HK$1.05 billion, were traded during the session.

Shanghai-listed China Tourism sold 102.76 million shares in the listing.

The company priced its shares at the upper end of the HK$143.50 to HK$165.50 range flagged when the deal was launched this month. That price represents a discount of about 35% to the trading value of the Shanghai listed stock.

“The pricing was expensive, given the ongoing Covid-19 outbreak in China, and deteriorating profitability of the company,” Shifara Samsudeen, a LightStream Research analyst who publishes on Smartkarma, said.

“The Hong Kong shares are trading around the listing price and we expect the share price to drop further in the coming days, as the outlook on the travel retail sector is bleak, given the slowdown in global economies.”

Institutional investors subscribed for 4.7 times the number of shares on offer in the international tranche of the deal, the firm’s filings showed.

The deal’s bookbuild was carried out as Hainan, the company’s biggest mainland market, was locked down due to a Covid outbreak.

China Tourism’s listing takes to $6.7 billion the amount raised in Hong Kong in initial public offerings and secondary listings so far in 2022, down nearly 81% on the same last year, Refinitiv data shows.

It is the year’s slowest start for the city’s equity capital markets since 2013, the data showed.

 

  • Reuters with additional editing by Jim Pollard

 

ALSO SEE:

 

China Stocks Rebound on Stimulus But All Eyes on US Fed

 

 

Yuan Rises After Regulator Urges Banks to Ease USD Buying

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

Recent Posts

China Buys Russian Oil at Deepest Discount in Months

The effective prices refiners pay could exceed the $60 per-barrel cap that came into effect…

55 mins ago

EV Maker Vietnam’s First Company to List in US

If successful, VinFast will be Vietnam's first company to list in the United States

55 mins ago

Plunging Trade Risks China’s Status as the ‘World’s Factory’

China's uncompromising Covid policies, poor domestic demand and a real estate sector crash all combined…

18 hours ago

China Debt Ratio Three Times GDP in Record High – Nikkei

With private businesses reluctant to spend, local government and state-owned banks stepped into the gap…

19 hours ago

US Eases Planned Curbs Against China Chips Over Cost Fears

The move followed pushback from trade groups like the US Chamber of Commerce which argued…

22 hours ago

Asia Stocks Sink as Recession, China Covid Fears Weigh

Investors were in pessimistic mood with US banks predicting a downturn next year and worries…

23 hours ago