Three debuts raised HK$3.62 bln with shares priced below maximum
HK has had strongest start to a year for share sales since 2021
Alsco's retail tranche was oversubscribed more than 5,000 times
Oil has surged to near $120 as Middle East conflict escalated
Adds analyst comments, updates with closing share prices
By Yantoultra Ngui and Donny Kwok
HONG KONG/SINGAPORE, March 9 (Reuters) - War in the Middle East weighed on the market debuts of three Chinese company listings in Hong Kong on Monday, clouding the outlook for share sales after a strong start to the year in the Asian financial hub.
Alsco Pooling Service 2649.HK plunged 44% on its Hong Kong debut, while Estun Automation 2715.HK dropped 16%. Shenzhen Zhaowei Machinery & Electronics 2692.HK eked out a 2.4% gain, but after pricing its offering well below the top of its range.
The three Hong Kong share listings were the first since the Middle East conflict broke out at the end of last month, riling global equity markets as oil soared to near $120 a barrel, fanning fears of spiking inflation and slowing growth.
Dickie Wong, executive director of research at Hong Kong-based uSMART Securities, said the poor debuts highlighted the fragile market environment. "Upcoming IPOs could face heightened volatility, subdued openings or even deeper dives unless oil prices and geopolitical tensions ease and the Hang Seng Index stages a meaningful rebound."
STRONG START FOR SHARE SALES
Hong Kong had the strongest start to a year for share sales since 2021, with IPOs and secondary listings in January raising around $5.5 billion, LSEG data showed.
A wave of Chinese companies planned to come to market after the end of last month's Lunar New Year holiday, but have been faced by souring investor sentiment with the outbreak of the war.
George Au, deputy sales director at Phillip Securities, said the Middle East situation had turned overall sentiment "panicky", dampening appetite even for companies without direct exposure to the region.
He said that dual mainland and Hong Kong listings - such as Zhaowei and industrial robot maker Estun - carry extra uncertainty in volatile markets because of the three-day lag between subscription and grey market trading.
"You don't know how things will play out during those days," Au said.
The three companies raised a combined HK$3.62 billion ($463.13 million) in share sales last week, with Estun and Alsco pricing at the bottom of their offered ranges. Zhaowei didn't give a minimum offer level, but priced more than 3% below its maximum guidance.
Zhaowei raised the bulk of the total with HK$1.91 billion, after launching its offer on February 27, a day before the war broke out. Estun raised HK$1.49 billion, while Alsco raised HK$223.7 million.
The Hong Kong pipeline continues this week with MeiG Smart Technology 3268.HK 002881.SZ scheduled to list on Tuesday after setting its offer price at the maximum HK$28.86.
In a research note on Monday, CICC said Hong Kong equities were likely to be more volatile than mainland China's A shares in any oil-driven risk-off move, but warned prolonged high oil prices would still hurt China's economy.
HK NOT ALONE WITH LACKLUSTRE DEBUTS
Investor caution has been evident around the region, which experienced a boom in share offerings last year.
In Seoul, online lender K Bank 279570.KS ended only slightly above its IPO price on its debut in Seoul on Thursday. By Monday, K Bank was down 17% from its IPO price.
Singapore's UI Boustead REIT UIBO.SI is scheduled to begin trading on Thursday on the domestic bourse, while Malaysia's Sunway Healthcare IPO-SUNA.KL is set to list on Bursa Malaysia on March 18. Share markets from Tokyo to Mumbai nosedived on Monday. Hong Kong's benchmark Hang Seng Index .HSI ended the day down 1.4%.
Winston Ma, an adjunct professor at NYU School of Law and former head of North America for China Investment Corp, China's sovereign wealth fund, said oil's 31% surge to the cusp of $120 was amplifying liquidity strains and flipping investor sentiment across all markets, adding the risks to growth and margins were "merely the beginning".
($1 = 7.8152 Hong Kong dollars)
(Reporting by Donny Kwok in Hong Kong and Yantoultra Ngui in Singapore; Additional reporting by Gu Li in Shanghai, Jiaxing Li, Selena Li and Jayshree P Upadhyay in Hong Kong; Editing by Jacqueline Wong and Kevin Buckland)
((Yantoultra.Ngui@thomsonreuters.com;))
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