HONG KONG, China — Shares in Chinese bubble-tea chain Baicha Baidao plunged nearly 40 percent on its first trading day in Hong Kong on Tuesday, in a fresh blow to the finance hub’s efforts to revive its markets.
The Chengdu-based company, which is also known as Chabaidao, raised about HK$2.59 billion (US$330 million) during its November initial public offering — with no others topping it since.
But soon after opening, it plunged from its HK$17.50 listing price to HK$10.80, marking a drop of 38 percent, before paring some of the losses to end at HK$12.80.
The plunge marked the worst debut since 2015 for a company that had raised at least US$300 million, according to Bloomberg.
Another debutant, Tianjin Construction Development Group, tanked more than 30 percent, having raised about US$20 million in its IPO.
The losses dealt a blow to the government’s plan to help reboot Hong Kong’s trading market, which has seen a drop in fundraising through new listings for four years in a row.
READ: China, HK stocks end 2023 as world’s worst performers, down over 10%
But Hong Kong’s security chief-turned-city leader John Lee told reporters Tuesday that five new measures announced last week by China’s securities regulator would help boost sentiment.
Blow to efforts to revive the market
They include allowing more funds — such as Hong Kong’s real estate investment trusts — to undertake cross-border trading, and supporting leading Chinese companies to list in the city.
“Dozens of companies have applied to the mainland regulators for going public in Hong Kong, including large companies from traditional industries like manufacturing and logistics, as well as key companies from high value-added industries like AI and fintech,” Lee said.
READ: Hong Kong leads Asian markets higher, traders assess Fed plans
“We have also been actively promoting financing in Hong Kong to top unicorn companies in the mainland,” he said, referring to startups worth at least US$1 billion.
While reporting its second-best profits on record in February, the Hong Kong exchange saw only 73 IPOs last year, raising HK$46.3 billion.
READ: Chinese firms’ fundraisings in limbo
The drop in interest comes after a regulatory crackdown on firms by Beijing that began in 2020, leading some Chinese mega-companies to put their listing plans on hold.
China’s last-minute cancellation of a 2020 IPO by Alibaba subsidiary Ant Group, which would have been the world’s biggest ever, kickstarted a years-long clampdown that spread to multiple sectors and wiped out trillions of dollars in firms’ market value.