Daily Report

Four IPOs, but HK stocks slip back as market awaits fresh economic numbers

DFZQ becomes first mainland brokerage to list since last summer’s market rout

PUBLISHED : Friday, 08 July, 2016, 9:20am
UPDATED : Friday, 08 July, 2016, 6:08pm

Four companies were listed on Friday, a rare event in recent times for the Hong Kong Stock Exchange.

They included the first mainland brokerage house to list in Hong Kong since China’s stock market rout in the middle of last year.

DFZQ, which is already listed in Shanghai, saw its shares dip 0.61 per cent to end at HK$8.1 on their trading debut. The brokerage’s H-shares were not fully subscribed by retail investors during the book building, allowing the firm to set its listing price at HK$8.15, compared with its indicative range of HK$7.85 to HK$9.35. DFZQ raised a net of HK$6.8 billion yuan.

“[DFZQ’s debut performance] is within our expectation,” said Linus Yip Sheung-chi, First Shanghai Securities’ chief strategist.

“Investor interest is not high as Hong Kong has lots of securities stocks, and also recently people have been turning more conservative.”

DFZQ’s performance is also likely to add pressure on its peers in the IPO pipeline, China Merchants Securities and Everbright Securities, Yip said.

Among the other new listings, Future Data Group, a Korean data service provider engaged in system integration and maintenance, saw its shares soar 51.7 per cent to HK$0.88 on the Growth Enterprise Market board.

Qinqin Foodstuffs Group, however, shares closed flat at HK$3.14 and China Golden Classic Group shares gained just 1.16 per cent to HK$0.44.

A collective decrease in Hong Kong and mainland stock markets on Friday dragged the performance of the new listings, Yip said.

The prudent sentiment may extend to next week. People are still waiting to see whether more monetary easing policies will be launched in the near term
Linus Yip Sheung-chi, First Shanghai Securities’ chief strategist

The Hang Seng Index fell 0.69 per cent or 142.75 points to 20,564.17, held back by the tumbling oil price. The Hang Seng China Enterprises Index dropped 0.77 per cent or 66.2 to 8,534.79.

Turnover was HK$47.19, a fresh six-week low after it fell to HK$49.7 billion on Thursday.

“Investors were reluctant to make any moves, ” said analysts from China Investment Securities in a Friday note.

“They are waiting for the US non-farm payroll figures for June next Friday, and upcoming economic data from China.”

China is due to release its CPI and PPI numbers over the weekend. Later in the week, it will unveil GDP growth for the second quarter.

“The prudent sentiment may extend to next week. People are still waiting to see whether more monetary easing policies will be launched in the near term,” Yip said.

Oil shares suffered heavy losses, after crude futures in New York and London slumped nearly 5 per cent to hit a two-month low overnight.

Refining giant Sinopec fell 1.64 per cent to HK$5.4 and PetroChina dipped 0.57 per cent to HK$5.23, offshore oil producer CNOOC slid 1.35 per cent to HK$9.49.

HSBC Holdings slipped 0.32 per cent to HK$46.85, extending a previous decline, after Standard & Poor’s lowered the rating outlooks of several UK banks to negative, including HSBC, Barclays and Lloyds.

On the mainland, the Shanghai Composite Index ended at 2,988.09, down 0.95 per cent or 28.75 points, ending a rising streak lasting six days.

The large-cap CSI300 shed 0.55 per cent to 3,192.28. The Shenzhen Composite Index dipped 0.14 per cent to 2,012.29, while the startup board ChiNext Index ticked up 0.23 per cent to 2,239.0.

Metals, coal and banking stocks fell while those in airline and transportation sectors rose.

Over the week, the Hang Sang Index shed 1.1 per cent after a extended gain in two weeks.

The Shanghai Composite Index climbed 1.94 per cent, compared with a gain of 2.74 per cent a week earlier.

China Vanke’s A-shares eventually ended the week down 23.5 per cent, after they resumed trading in Shenzhen on Monday, as a long-running takeover battle remained unresolved with its major shareholders.