The Hong Kong market is still feeling the chill as air conditioner maker Midea floats

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Appliance maker Midea is set to raise about $4 billion in a secondary listing in Hong Kong, but the biggest market debut in more than three years does not yet signal a broader revival of public offerings, according to analysts.

The sum raised by the maker of refrigerators and air-conditioning units will provide a much-needed boost to dire numbers, with markets in Hong Kong and mainland China mired in one of the worst years for listings in a decade.

The company, headquartered in the southern province of Guangdong and already listed across the border in Shenzhen, closed its Hong Kong book a day earlier on Thursday. Its stock offering was several times oversubscribed, according to people familiar with the listing. Shares were quoted at the top of the range at $54.80 and the number offered was increased ahead of Tuesday’s market debut.

Industry experts said a successful listing of a mainland Chinese company with a strong international brand would not be enough to change the narrative in the Hong Kong market.

“I wouldn’t consider it a broad comment on a new IPO cycle,” said Zhikai Chen, head of Asia Equities at BNP Paribas Asset Management. “This is very specific to a market champion in white goods.”

Midea, which bought German robotics maker Kuka in 2017, has about 40 percent of its sales outside of China.

Midea’s float is the biggest in the territory since short-lived video app Kuaishou’s in January 2021. Its Shenzhen shares traded at a premium of about 21 percent to their Hong Kong listing price at Friday’s close and were the seventh most traded security through shares in Hong Kong. Mainland exchange connectivity in August, according to HKEX data.

A person familiar with the process cautioned that an “A to H” listing, in which a mainland Chinese-listed company launched a secondary listing in Hong Kong, did not necessarily herald a reopening of the IPO pipeline, although it was a positive step . The HKEX said at the end of June that it had 107 active IPO applications.

“It is not known whether Hong Kong could absorb that much paper,” the person added, referring to the market’s liquidity. “It also shows that global investors are not outside of China.”

Tim Wang, partner and chairman of law firm Clifford Chance in China, said they were seeing “strong interest in mainland Chinese companies to list in Hong Kong”.

Cornerstone investors in the Hong Kong listing, which must hold the shares for at least six months, include carmaker BYD, UBS Asset Management and Cosco Shipping. They have committed about $1.6 billion to the offer, according to a term sheet seen by the Financial Times.

The Hong Kong stock market lagged behind the Indian stock market in terms of total equity value for the first time earlier this year. It dropped to eighth place worldwide in terms of listing value in 2024, behind Madrid and Amsterdam, according to Dealogic data. Also, the value of companies delisting in Hong Kong is at its highest since 2020.

In mainland China, the picture is even bleaker. The amount raised in mainland China A-share IPOs so far in 2024 has fallen 86% year-on-year and is the lowest of any year on record, according to Dealogic, except for 2013, when regulators stopped all shows to review the rules. . Domestic mergers and acquisitions, at $129 billion, are at their lowest level since 2013.

Syngenta, the Swiss agrochemicals group, earlier this year withdrew its long-held plans to list in Shanghai. China’s securities regulator has also stepped up its scrutiny of new listings.

The collapse in market activity is part of a broader decline in mainland China’s economic and business sentiment. Beijing has renewed its focus on industry and sought to reduce reliance on a struggling real estate sector.

Additional reporting by Chan Ho-him in Hong Kong aand Thomas Hale in Shanghai