Hong Kong IPOs flop as Leapmotor sinks 34 per cent in market debut and Onewo struggles below offer price

Zhejiang Leapmotor plunges 34 per cent while Onewo loses almost 7 per cent

Both IPOs were undersubscribed by local investors in a week when the Hang Seng Index hits an 11-year low, forcing them to price in lower-half of range

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A woman walks past a panel displaying stock indices of Hong Kong, US and China markets, outside a bank in Hong Kong. Photo: Reuters

Mia Castagnonein Hong KongandDaniel Renin Shanghai

Published: 10:28am, 29 Sep 2022Updated: 6:42pm, 29 Sep 2022

Two stock debutants struggled in Hong Kong trading, with Zhejiang Leapmotor Technology sinking by 34 per cent, after an underwhelming response to their initial public offerings (IPOs) in a week when the local market slumped to the lowest level in 11 years.

Electric-car maker Leapmotor first traded at HK$41, versus its IPO price of HK$48 (US$6.11), before closing at HK$31.90. Onewo, a property management services unit of China Vanke, opened at HK$45.60 and ended at HK$46, 6.8 per cent below its offer price of HK$49.35.

Onewo declined as much as 15 per cent to HK$42.05 earlier. The Hang Seng Index dropped 0.5 per cent, reversing a gain of as much as 2.2 per cent to extend its decline from the lowest level since October 2011.

Both IPOs were undersubscribed, with local investors taking up only 16.4 per cent of the allocation in Leapmotor’s offering, one of the worst take-up responses to the city’s IPOs in recent years. Onewo sold 82 per cent of the shares offered to Hong Kong investors.

Employees work on the assembly line of T03 model at a factory of Chinese EV maker Leapmotor on December 17, 2021 in Jinhua, in China’s Zhejiang province. Photo: Getty Images

Leapmotor’s debut also ranked poorly among the IPOs of rival Chinese electric-vehicle makers in Hong Kong. Nio’s shares rose 1.4 per cent when they began trading in March this year, while Xpeng handed investors 1.8 per cent in July 2021. Li Auto fell 13 per cent when it started trading a month later.

Kelvin Cho, Leapmotor’s chief financial officer, told an online media briefing after the carmaker’s trading debut that the IPO had support and endorsement from high-quality global institutional investors, who believe in the long-term growth prospects of the company.