• Shenwan Hongyuan’s shares fell by as much as 15 per cent to an intraday low of HK$3.10
  • The brokerage had priced its IPO at the bottom of a price range, and was modestly oversubscribed, indicating lukewarm response by retail investors

Hong Kong’s biggest initial public offering (IPO) of 2019 got off to a dire start, as the shares of Shenwan Hongyuan plummeted to finish their first trading day down 12 per cent from the offer price.

It followed the cooling down of Hong Kong’s IPO market, after a blockbuster 2018 when the city retook the crown as the world’s No. 1 IPO market from New York. The year-long US-China trade war had sapped appetite for new issues, giving more companies reason for pause before tapping the capital market for funds.

Shenwan Hongyuan’s 2018 net profit fell 9.6 per cent due to a drop in commissions and brokerage fees, as China’s capital market was stuck deep in the doldrums of being the world’s worst-performing stock market, with the Shanghai Composite Index’s 24.6 per cent decline.

#RobertReview (Investments, Hong Kong IPO): 8 | 10

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Published: 16th May 2019.

China’s oldest brokerage Shenwan Hongyuan takes a nosedive as Asia’s biggest IPO of the year gets off to a dismal start