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. Shares of China’s oldest brokerage began trading unchanged at HK$3.63, then dropped 15 per cent to an intraday low of HK$3.10 before clawing back some ground to finish the first day down by 12 per cent at HK$3.20. The Beijing-based broker raised HK$9.1 billion (US$1.16 billion) this month, the largest stock sale this year in the Asia-Pacific region. The state-run brokerage, which was the result of a merger between Shenyin Wanguo and Hongyuan Securities, already has shares trading on the Shenzhen Stock Exchange. It would be the 12th Chinese brokerage with shares trading in both a mainland exchange, as well as in Hong Kong. Its Shenzhen-traded A shares closed 0.6 per cent lower at 5.37 yuan. “It still takes time for international investors to fully understand Chinese brokerages,” Shenwan Hongyuan’s chairman Chu Xiaoming said during a ceremony to mark the start of trading at the Hong Kong stock exchange. “I’m fully confident about the A share market’s performance in the second half. Our company will also perform well.” Shenwan Hongyuan Group, China’s oldest brokerage firm, rang the gong at the Hong Kong exchange to debut its H shares today pic.twitter.com/QUvIzadJ2i — Zoe Low (@ziqinglow) April 26, 2019 <!--//--><![CDATA[// ><!--\n\n\n//--><!]]> The brokerage, owned and controlled by state-owned Central Huijin Investment, priced its IPO at the bottom of the indicative range, and was overbought by 3.8 times, an indication of modest enthusiasm among retail investors. 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. Goldman Sachs, ICBC, ABC International, and a subsidiary of Shenwan Hongyuan were joint sponsors for the IPO. The brokerage also hired Credit Suisse and Citi as joint global coordinators.