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PR Newswire
07-05-2018, 07:24 PM
Any stock market is a dead pool without IPOs. But too many share sales can give investors indigestion.
Take Ping An Healthcare & Technology Co., or Good Doctor. It struggled on its first day on Friday, despite being 653 times oversubscribed. Its performance is in sharp contrast to Tencent Holdings Ltd. spinoff China Literature Ltd., which soared 86 percent when it debuted in November.
Hong Kong’s private bankers must have been making frantic calls to try and explain the result. Whereas some wealthy individuals netted $90,000 from China Literature, those hoping for a similar windfall with Good Doctor were sorely disappointed.
In Good Doctor’s retail tranche, 299 investors applied for 5.2 million shares each, the maximum allowed. At HK$54.80 apiece, that’s HK$285 million ($36 million) upfront.
Up to 90 percent of that amount could be financed on margin but – factoring in rising interest rates and IPO commission fees – investors would have needed a day-one pop of at least 18 percent just to break even. Those borrowing at a 3 percent annualized rate would have lost more than HK$156,000, or $20,000.
https://www.washingtonpost.com/business/...6c2ca6671f
Take Ping An Healthcare & Technology Co., or Good Doctor. It struggled on its first day on Friday, despite being 653 times oversubscribed. Its performance is in sharp contrast to Tencent Holdings Ltd. spinoff China Literature Ltd., which soared 86 percent when it debuted in November.
Hong Kong’s private bankers must have been making frantic calls to try and explain the result. Whereas some wealthy individuals netted $90,000 from China Literature, those hoping for a similar windfall with Good Doctor were sorely disappointed.
In Good Doctor’s retail tranche, 299 investors applied for 5.2 million shares each, the maximum allowed. At HK$54.80 apiece, that’s HK$285 million ($36 million) upfront.
Up to 90 percent of that amount could be financed on margin but – factoring in rising interest rates and IPO commission fees – investors would have needed a day-one pop of at least 18 percent just to break even. Those borrowing at a 3 percent annualized rate would have lost more than HK$156,000, or $20,000.
https://www.washingtonpost.com/business/...6c2ca6671f
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