Please see below article received from EPIC Investment Partners this morning, which offers an update on Hong Kong markets.
Midea Group raised HK$31bn (USD3.9bn) through its secondary listing on Hong Kong this week. It is the largest IPO in more than three years. The issue was heavily oversubscribed, priced at the top end of the range (HK$54.80) and is trading some 15-20% above the IPO price. The household appliances manufacturer is reasonably well known to investors having listed on the Shenzhen Stock Exchange back in 2015. The company’s market capitalisation is approximately US$75bn and it trades on a low double-digit price earnings multiple.
Bonnie Chan, chief executive of Hong Kong Exchanges and Clearing Ltd, hailed the “very positive momentum” for listings following Midea’s debut. A resurgence in the IPO pipeline would do wonders for Hong Kong Exchanges and Clearing, which is held in our Asian portfolios.
The other side of the coin is equally encouraging. Stock buybacks in Hong Listed stocks have soared over the past five years. In 2019 buybacks totalled $1.4bn. This rose to $2.1bn in 2020, $5.5bn in 2021, $13.2bn in 2022 and $23.9bn in 2023. Year to date buybacks total $30.7bn suggesting total buybacks for 2024 could exceed $45bn. A thirty two fold rise over five years!
Over the past five years (to end August 2024) the Hang Seng Index has declined 16.6%. This compares to the 28.8% gain in the regional index (Asia ex Japan) and the 109.1% rise in the S&P500.
With the Hong Kong market trading on 0.9x book value and yielding 4.4% the incentive to accelerate buybacks is obvious.
On a more humorous note, we spotted this quote from a Chinese lady bemoaning the authorities proposed upward adjustment to Chinese retirement ages. “When I was born, they said there were too many. When I gave birth, they said there were too few. When I wanted to work, they said I was too old. And when I retire, they say I am too young”. Priceless.
Please check in again with us soon for further relevant content and market news.
Chloe
20/09/2024