What bubble? HK retail investors seek $50bn in loans for Chinese online video IPO

By Scott Murdoch

HONG KONG, January 28 (Reuters)Hong Kong family investors raised more than $50 billion in margin funding to buy shares in Chinese company Kuaishou Technology’s IPO 1024.HKdefying concerns about a pullback in global markets fueled by a retail buying frenzy.

Online video site Kuaishou, which aims to raise up to $5.4 billion in the city’s biggest float in more than a year, is expected to sell shares at the top of the $105 marketing range at HK$115 on Friday, according to two sources with direct knowledge of the matter.

HSBC Margin Lending Application HSBA.L and Bank of China Hong Kong 2388.HK Buying shares of Kuaishou hit a record first day on Tuesday when the books opened for the trading portion of the deal, according to representatives of the two banks.

The two largest banks in the financial hub have made available at least 350 billion HK dollars ($45.14 billion) of margin funding as of Thursday, with at least 50 billion HK dollars additional ( $6.5 billion) offered by Hong Kong’s army of smaller brokerages.

The rush for funding by retail investors in Hong Kong for the initial public offering (IPO) comes even as soaring share prices of some loss-making companies and frothy valuations have stoked concerns about asset bubbles .

A flood of money supply, ultra-low or zero interest rates and the rollout of the COVID-19 vaccine sparked a buy-all rally, helping global equities add a whopping $33 trillion in value from their lows of last March.

“As the accumulated IPO loan applications for Kuaishou Technology have exceeded our initial quota of HK$150 billion ($19.35 billion), HSBC is allocating additional funding for this IPO,” a shareholder said. word of HSBC.

Kuaishou sells 9.1 million shares to retail investors in the IPO which represents 2.5% of the total amount of the transaction. At the top of the price range, the retail portion is worth HK$1.04 billion ($134.14 million).

A spokesperson for Kuaishou said the company “welcomes all investors” but declined to comment on the details and expected price of its IPO. The sources declined to be named as the information is not yet public.

Based on demand for margin lending, Kuaishou’s retail share will likely be oversubscribed at least 385 times based on the number of shares sold – in line with recent demand from family buyers for a public offering of shares in Hong Kong.

With this request under Hong Kong clawback rules, the amount of shares allocated to retail investors will increase from 2.5% to 6%, according to a term sheet of the agreement.

Official figures will be released before Kuaishou begins trading on the Hong Kong Stock Exchange on February 5.

“This is definitely the hottest IPO this year despite recent stock market volatility,” Dickie Wong, executive director of research at Kingston Securities, told Reuters.

($1 = HK$7.7531)

(Reporting by Scott Murdoch; Editing by Sumeet Chatterjee and Ana Nicolaci da Costa)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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