Geely Auto’s shares soar by the most in two months in Hong Kong after announcing plan to raise funds in Shanghai’s Star Market

Geely’s shares jumped by as much as 7.6 per cent to an intraday high of HK$12.80 in Thursday trading, the biggest intraday gain since April 17 before ending the day at HK$12.60. The plan to float shares on the Shanghai Science and Technology Innovation Board, or the Star Market, was approved by the company’s board of directors, the company said in a statement to the Hong Kong exchange.

The size of the offering will represent no more than 15 per cent of Geely’s enlarged share capital and the proceeds will used to expand business development and replenish working capital, according to the statement. The proposal is still pending approvals by shareholders.

Geely, based in eastern China’s Zhejiang provincial capital of Hangzhou, is one of the Chinese companies trading on the offshore markets adding home listings after policymakers started the Star Market in July to initiate a slew of reform measures, including no caps on pricing shares on the primary market and a wider daily trading band on the secondary. The Shanghai Stock Exchange is now reviewing the application for stock sales by Semiconductor Manufacturing International Corp. (SMIC), China’s biggest chip maker.

Infographic: Global carmakers and their venture partners in China

The Star Market hosts 112 companies currently, boasting combined market caps of 1.76 trillion yuan (US$248.3 billion) and an average price-to-earnings ratio of 81 times, according to the Shanghai exchange.