Summary of Key Points
On July 9th, the Hong Kong Stock Exchange (HKEX) saw 7 companies go public in one day, setting a new record for the highest number of IPOs in a single day this year. However, the performance on that first day was a mixed bag: some new shares tumbled significantly (such as Puyuan Precision, which fell by nearly 20%), while others soared by more than 100% (such as Qiyunshan Food). The number of IPOs and the amount of capital raised in the Hong Kong stock market have both doubled this year, with "A+H" companies (those listed on both the A-share and H-share markets) accounting for the majority of the funds. However, market divergence has intensified—tech leaders in areas like AI and robotics are being eagerly sought after by investors, while small and medium-sized companies in traditional industries are frequently experiencing share price failures. Investors are beginning to worry that the market may not be able to absorb so many new listings.
I. 7 IPOs in One Day on the HKEX: Who Are These Companies?
Among the 7 companies, there were both "giant re-listings" and "first movers in niche sectors":
- A+H Group: Luxshare Precision (the leading company in the A-share electronics supply chain, raising HK$24.3 billion with support from 26 major institutions including Temasek, Tencent, and Hillhouse Capital), Dingtai High-Tech (a leader in PCB cutting tools with orders exceeding 354 times their offering price), Sanhuan Group (the world's number one in electronic ceramics), and Puyuan Precision (an enterprise in electronic measurement instruments). All four of these companies are large players re-listing from the A-share market to the HKEX.
- First Movers in New Sectors: Luoshi Robotics (the first company in the full range of intelligent robotics, founded by a doctoral student from Harbin Institute of Technology, with orders 156 times their offering price), Qiyunshan Food (a leader in southern jujube cakes in Jiangxi, known as the "first stock in the southern jujube snack industry"), and Dongfang Kemaie (the world's second-largest manufacturer of electronic paper).
It is worth noting that Qiyunshan Food and Dongfang Kemaie did not seek "cornerstone investors" (major institutions that agree to buy shares in advance), whereas the other five companies had significant institutional support.
II. Contrasting First-Day Performances: Some Lost 20%, Others Doubled Their Value?
Divergence was evident right from the opening:
- Companies with Share Price Failures: Luxshare Precision fell by 5%, Dingtai High-Tech by 9%, and Puyuan Precision by nearly 20%—these either had an overly high offering price or lacked market interest in their industries (such as electronic measurement instruments).
- Companies with Strong Performance: Qiyunshan Food rose by 110% (small market capitalization + consumer sector, possibly due to speculative buying), and Luoshi Robotics had a slight increase (the robotics sector is highly sought after).
- Stable Companies: Sanhuan Group opened at par, while Dongfang Kemaie opened lower but then rose slightly.
This divergence is not accidental: In the first half of the year, new stock listings in the HKEX were still very profitable (average first-day return was 61%), but the trend has changed in the second half—most new shares performed poorly on their debut, with some even falling by more than 40% like Tongrentang Medical Care.
III. Why Are Hong Kong IPOs So Popular This Year? Large Companies Are Driving the Trend
This year has seen a surge in HKEX IPOs:
- Doubled Number of Listings: 82 Chinese companies went public in the first half of the year, compared to the same period last year.
- Doubled Capital Raised: Total capital raised amounted to RMB 163.3 billion, a 105% increase year-on-year.
- A+H Companies Dominate: 24 companies are "A+H" re-listings, exceeding the total for the entire last year (19), and they have taken up nearly 60% of the raised funds. In short, large A-share companies are coming to the HKEX to raise additional capital, drawing most of the market's funds.
This has also led to a diversion of resources away from small and medium-sized companies, making it easier for them to experience share price failures.
IV. The Root of the Divergence: Investors Only Focus on "Hot Tech Trends"
Current market funds are flowing towards AI, robotics, and other emerging technologies:
- Tech Stars Performing Well: Zhipu AI rose by 15 times after its listing and continued to climb on the day of share lock-up expiration; Minimax also increased from HK$165 to HK$1330—these companies attract funds due to their compelling tech stories.
- Traditional Companies Facing Challenges: Small and medium-sized companies in manufacturing, food, and hardware industries either have high P/E ratios relative to their industry (making their shares overpriced) or suffer from poor liquidity (few buyers, leading to significant price drops).
- Differences in Lock-up Expirations: Leading tech stocks generally see gains after lock-up expiration (due to long-term institutional holdings), while smaller companies experience sharp declines (for example, Yunzhisheng fell by 50% on the day of lock-up expiration). The key factor is whether they have real performance to back up their offerings; just having a compelling story is not enough.
V. Market Concerns: Can the HKEX Handle So Many IPOs?
There are now over 500 companies waiting to list on the HKEX, a record high. However, issues arise:
- Excessive Number of Listings: 13 companies have already gone public this week, with another two scheduled for tomorrow, and 15 IPOs in just one week—there is not enough market capital to support all of them.
- Insufficient Market Capacity: Large companies take up most of the funds, leaving little for small and medium-sized companies, which often result in share price failures.
- Unsustainable Growth: Many companies rely on temporary trends to go public, but without actual performance (such as AI companies that do not generate profits), their shares will eventually decline.
In summary, the current HKEX IPO market is characterized by a clear divide: "hot sectors" are getting even hotter, while "cold sectors" are getting even colder. Companies eager to list are competing fiercely, but only the leading tech firms are likely to have successful listings, while smaller traditional companies may face significant losses shortly after going public.
(The entire analysis is presented in plain language to make it easy for non-experts to understand the current state of HKEX IPOs and the underlying reasons for the market's divergence.)