JD Ends Higher in $4 Billion Hong Kong Debut

Also significant, the online retailer concluded the mid-year shopping festival today.

Anna Vodopyanova
    Jun 18, 2020 8:40 AM  PT
JD Ends Higher in $4 Billion Hong Kong Debut
author: Anna Vodopyanova   

China's e-commerce giant No.2, JD.com ended 3.5% higher in Hong Kong debut before slipping 3% lower in New York Thursday.

The online retailer, which also celebrated its mid-year sales festival "618" today, raised $3.9 billion in this offering, making it the second-largest in Hong Kong this year. JD (Nasdaq: JD; HKEX: 09618) became dually-listed just a week after NetEase (Nasdaq: NTES; HKEX: 09999), which scored $2.7 billion and enjoyed massive oversubscription.

More large listings from China are lined to go public in the city, including U.S.-listed Yum China Holdings, Inc. (NYSE: YUMC), which may raise up to $2 billion, China Bohai Bank Co., possibly another $2 billion IPO, and Kangji Medical Holdings Ltd., seeking up to $404 million.

Three more companies, e-cigarette maker Smoore International Holdings Ltd., the property management unit of Zhenro Properties Group and Shenzhen Hepalink Pharmaceutical Group Co., just this week began preparing for their debut in the city, Bloomberg reported. Smoore could raise up to $800 million, the medium said.

Earlier, China's top search engine Baidu (Nasdaq: BIDU) publicly reacted to Washington's proposed new bill tightening the cap on foreign listings in New York and also voiced its consideration of a Hong Kong IPO.

Thus, while the Stock Exchange of Hong Kong remains behind New York and Shanghai with $10.12 billion in raised capital this year, this may not be the case for long. 

Meanwhile, another stock exchange in China, Shenzhen's ChiNext, may rise to compete with Shanghai's high-tech STAR Market. This week, ChiNext reformed itself from a registration-based IPO process from an approval-based model, though companies seeking to list on the exchange will be more small-to-mid-cap firms.

JD.com priced its newly-issued shares at HK$226 per share, an equivalent of about $58.32 per American depositary share – that's a drop of 6% from yesterday's close of $62.01 per ADS on the Nasdaq. In Hong Kong Thursday, "09618" closed at HK$234 per share, HK$8 up on debut day.

This week, China's retail giants conclude their mid-year shopping festival, which began in early June. This year, 618 which is especially significant as it follows mass closures of businesses throughout China during the Covid-19 outbreak in the first quarter. Last month, Beijing reported that more than 600 million people in China earn less than 1,000 yuan ($140) per month, their livelihood further weakened by the epidemic. The results of the 618–2020 event will show just how much the country's consumers are willing to spend after the lockdown has kept most from work.

Judging by the reports from the opening days of the festival, consumers flocked in for some "revenge consumption."  Now, as China is seeing a spark of Covid-19 cases, we wait to see the final results.

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