New | Crosstec shares oversubscribed 1,000 times as Hong Kong’s IPO punters chase ‘easy money’

Diminishing prospects for a US interest rate rise combined with easy financing from banks and brokers have encouraged Hong Kong’s “IPO punters” to return to the market seeking higher-than-average returns.

Crosstec Group Holdings saw its share sale oversubscribed more than 1,000 times on Monday after retail investors flocked to the offering, making the Hong Kong-based interior designer the second-highest overbought public offering this year solely through margin orders.

The company offered 600 million shares at between 10 and 15 HK cents each, seeking to raise HK$90 million, of which 10 per cent was reserved for retail investors.

By the time Crosstec closed its books on Monday, retail investors had bid for HK$9.56 billion worth of orders backed by margin financing from seven brokerages, equal to a 1,061 times oversubscription.

“Market sentiment is improving as investors feel the US rate rise is unlikely to happen in September, so some turned to riskier assets for higher returns,” said Wing Fung Financial Group’s research head Mark To.

So-called IPO punters typically buy shares from initial public offerings, hoping to make a quick return by selling at a premium on the first day of trading.

The rush for Crosstec shares may have been led by a few investors who splashed vast sums of money, exploiting the availability of easy financing that required very little down payment, said Kwok Sze-chi, marketing director of Hong Kong brokerage Bright Smart Group.