The race to be the top IPO stock in Hong Kong is heating up, with several companies vying for the number one spot. But which company has the highest return so far?
Here’s a look at the contenders and their track records.
The definition of an IPO
An IPO, or Initial Public Offering, is when a company first sells shares to the public. IPOs are often oversubscribed, meaning there is more demand for the stock than supply. This can lead to much excitement and speculation about which IPO will be the most successful.
The types of IPOs
There are two different types of IPOs that a company can go public through in Hong Kong:
The Main Board
The Growth Enterprise Market (GEM)
The Main Board is the exchange’s flagship market and has the most significant number of listed companies. It is also the most prestigious, with listing requirements that are more stringent than the GEM.
The GEM was created in 1999 to provide a platform for high-growth and emerging companies to list on the exchange. The listing requirements are more relaxed than the Main Board, making it an attractive option for companies that might still need to meet the criteria to list on the Main Board.
How an IPO works
There are four main steps in an IPO process:
1) Filing of a prospectus
2) Allotment of shares
3) Listing of shares
4) Commencement of trading
A company will file a prospectus with the Hong Kong Stock Exchange, which contains information about the company and its offering. Once the prospectus is filed, the company will conduct a roadshow to market the IPO to potential investors.
After the roadshow, the company will allocate shares to investors through allotment. An allotment is when a company decides how many shares each investor will get based on the amount of money they have committed to invest.
Once the allotment is complete, the shares will be listed on the exchange, and trading will commence. This is when investors will be able to buy and sell shares in the company on the open market.
IPO performance in Hong Kong
IPOs in Hong Kong have performed well in recent years, with the average IPO doubling in value from its offer price within the first year of trading. While there is no guarantee that every IPO will be successful, the Hong Kong Stock Exchange has a track record of producing some of the most successful IPOs in the world.
For instance, the Alibaba Group is a Chinese e-commerce giant founded in 1999 by Jack Ma. The company went public on the Hong Kong Stock Exchange in 2014 in the largest IPO ever. Alibaba Group’s IPO raked in a whopping $25 billion, and the company is now worth half a trillion dollars, making it one of the most successful companies globally.
Hutchison Whampoa is a conglomerate that operates in several industries, including telecommunications, energy, shipping, and retail. The company was founded in 1828 and listed on the Hong Kong Stock Exchange in 1972. Hutchison Whampoa has a market capitalization of $48 billion as of 2019.
Tencent Holdings is a Chinese internet company that was founded in 1998. The company went public on the Hong Kong Stock Exchange in 2004 and is now one of the most valuable companies in the world, with a market capitalisation of over $500 billion. Tencent Holdings is best known for its messaging app WeChat, which has over 1 billion users.
Alibaba Group, Hutchison Whampoa, and Tencent Holdings are just three examples of companies that have gone public through an IPO on the Hong Kong Stock Exchange and become some of the most significant and valuable companies in the world.
Final thoughts
The Hong Kong Stock Exchange is a renowned exchange with a long history of successful IPOs. Companies that list on the Hong Kong Stock Exchange can raise a significant amount of capital and gain access to a global investor base.
If you’re considering going public through an IPO with an online platform like Saxo, then the Hong Kong Stock Exchange should be one of the exchanges you consider.
