Hong Kong’s two biggest stock offerings since 2021 came this month after a pair of electric vehicle makers took advantage of one of the world’s biggest market rallies.
Xiaomi Corp just raised $5.5 billion, filling up a war chest for the Chinese mainland company’s aggressive expansion of its EV business. That came just weeks after BYD Co fetched $5.6 billion in a share sale.
The two mega deals have pushed follow-on offerings in the Hong Kong Special Administrative Region to over $13 billion this year, on track for the Asian financial hub’s biggest quarter since the April-to-June period four years ago, according to data compiled by Bloomberg.
READ MORE: BYD raises $5.59 billion in share sale, Hong Kong's largest in four years
After years of slumping share prices, the benchmark Hang Seng Index has turned into one of the world’s best performers, prompting companies to capitalize on the rally by raising funds via stock offerings.
“The party seems to be continuing,” said Andy Maynard, head of equities at China Renaissance Securities. “There was $11 billion in new paper in the past few weeks — that’s impressive. People are still happy to buy, regardless of what’s happening in geopolitics.”
Xiaomi shares have more than tripled from August after the company delivered its fastest revenue growth since 2021. BYD’s stock has soared more than 80 percent in the past year as the company climbed to the top of the mainland’s car market and outsold Tesla Inc in 2024.
READ MORE: Mainland investors drive Hong Kong rally with $19 billion inflow
Although the rally in mainland technology stocks is showing signs of faltering, to some conditions appear to stay ripe for more offerings to come.
“Other companies that are likely to follow suit will mostly be tech ones, especially those that have seen their share prices rally,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It’s a good opportunity to use their higher share prices to raise more money.”
While Hong Kong’s equity capital markets have yet to match the boom years of 2020 and 2021, the two deals will strengthen expectations that this year can mark a sustained turnaround in sentiment. BYD’s share sale was the biggest in the city since since food-delivery firm Meituan raised $10 billion in 2021 through a combination of a top-up placement and convertible bonds.
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BYD and Xiaomi’s placements also mark a strong start for Goldman Sachs Group Inc, which worked on both share sales, helping the bank sit atop adviser rankings for Hong Kong equity offerings this year, according to Bloomberg League Tables.
