What bubble? Hong Kong retail investors seek $ 50 billion in loans for Chinese online video IPO

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HONG KONG, Jan.28 (Reuters) – Hong Kong family investors have raised more than $ 50 billion in margin funding to buy shares in the initial public offering of Chinese firm Kuaishou Technology (1024.HK), defying 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 for more than a year, is expected to rank the shares at the top of the 105 to 115 Hong Kong dollars on Friday, according to two direct sources. knowledge of the subject.

HSBC Margin Loan Application (HSBA.L) and Bank of China Hong Kong (2388.HK) to buy shares of Kuaishou hit a record high on the first day Tuesday when the books were opened for the retail part of the deal, according to representatives of the two banks.

The two largest banks in the financial center made available at least HK $ 350 billion ($ 45.14 billion) in margin funding on Thursday with at least an additional HK $ 50 billion ($ 6.5 billion) offered by Hong Kong’s army of small brokers.

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

An influx of money supply, ultra-low or zero interest rates, and the deployment of the COVID-19 vaccine have sparked a ‘buy it all’ rally, helping global stocks add a whopping $ 33 trillion in value compared to to their lows of last March. Read more

“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,” said a spokesperson for HSBC.

Kuaishou sells 9.1 million shares to retail investors as part of the IPO, which represents 2.5% of the total deal. At the top of the price range, the retail part 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 because the information is not yet public.

Based on demand for margin loans, the retail part of Kuaishou will likely be at least 385 times oversubscribed 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 demand under Hong Kong’s clawback rules, the amount of shares allocated to retail investors will drop from 2.5% to 6%, according to a terms sheet of the deal.

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

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

($ 1 = 7.7531 Hong Kong dollars)

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

Our standards: Thomson Reuters Trust Principles.

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