China’s biggest pork producer Muyuan flat in Hong Kong share debut
Firm’s US$1.4 billion IPO records lower oversubscription rate than other recent listings, reflecting a cooling of the red-hot market
Shares of China’s biggest pig breeder Muyuan Foods opened flat in their Hong Kong debut on Friday, reflecting a cooling in the city’s red-hot initial public offering (IPO) market as retail investors turn more cautious.
The world’s largest hog firm’s shares first changed hands at the offer price of HK$39 and gained 3.9 per cent to HK$40.52 at the close, as the firm’s long-term growth prospects gained footing.
Muyuan raised HK$10.7 billion (US$1.4 billion) after pricing the shares at the top of the marketed range, which marked a discount of more than 25 per cent versus its Shenzhen-traded shares based on Thursday’s close. Hong Kong shares, or H shares, typically trade at a discount compared with their counterparts in mainland China (A shares) to attract investors.
“Given the AH price gap, it’s very unlikely to trade near A-share levels,” said Dickie Wong, executive director of research at uSmart Securities.
The discount “gives decent downside protection and attracts some AH arbitrage and institutional interest”, while retail investors showed light commitment, he added.
Muyuan’s performance followed the modest debut of another billion-dollar deal, Eastroc Beverage, earlier this week, highlighting a cooling in Hong Kong’s IPO sentiment as the market undergoes a period of correction.