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UPDATE 2-Shares of Tencent-backed Kuaishou triple in HK debut as retail frenzy continues

· 02/04/2021 20:39
UPDATE 2-Shares of Tencent-backed Kuaishou triple in HK debut as retail frenzy continues

Adds analyst comment, updates share price, context

By Alun John and Donny Kwok

- Shares in online video platform Kuaishou Technology 1024.HK tripled on their Hong Kong stock market debut on Friday, driven by massive demand from mom-and-pop investors amid a global retail trading frenzy.

The shares of the Chinese firm, backed by Tencent Holdings 0700.HK, opened at HK$338 ($43.60) and rose to HK$345, versus the HK$115 apiece they fetched in the IPO. Kuaishou's $5.4 billion float is the largest in Hong Kong since Budweiser's Asia unit 1876.HK raised $5.75 billion in 2019. nL1N2K40MB

Retail investors bid for 1,204 times the amount of Kuaishou shares on offer for them, mostly backed by borrowed money, as the initial public offering closed on Friday.

"The demand for the IPO was massive because it is a leader in online video ... and investors have been waiting for this one since the Ant IPO was cancelled," said Louis Tse, managing director of brokerage Wealthy Securities.

Chinese fintech giant Ant Group's $37 billion dual-listing in Hong Kong and Shanghai, which would have been the world's biggest, was suspended just days before the scheduled debut in November following a regulatory crackdown. nL1N2HP155

The Kuaishou debut adds to a string of recent blockbuster Hong Kong listings, which analysts see as a promising sign for others looking to raise capital in the Asian financial hub.

JD Health International Inc 6618.HK gained 56% when it debuted in December after raising about $3.48 billion.

But these come against the backdrop of growing fears about an asset bubble, with amateur investors boosting the price of assets ranging from cryptocurrencies to new market listings.

Those concerns, triggered by a sharp rise and fall in U.S. videogame retailer GameStop GME.N and a few other stocks, have prompted some brokerages globally to raise margin requirements or stop offering leverage for buying securities. nL1N2K30QK

Individual investors in Hong Kong, which has among the highest retail trading levels in the world, are renowned for borrowing heavily as larger bids boost the chances of being allocated shares in an IPO.

Tse said the surge in Kuaishou shares was mainly a result of demand from investors in mainland China, who cannot invest in IPOs but can buy in the secondary market, and retail investors in Hong Kong who failed to get shares in Kuaishou's IPO.

"This bodes well for other Hong Kong IPOs, if the companies are well known on the mainland," he said.

($1 = 7.7526 Hong Kong dollars)


(Reporting by Donny Kwok and Alun John; Writing by Sumeet Chatterjee; Editing by Himani Sarkar)

((Alun.John@thomsonreuters.com; +852-28415827;))