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China bubble tea chain Chabaidao plunges on Hong Kong debut

China bubble tea chain Chabaidao plunges on Hong Kong debut

HONG KONG: Shares in Chinese bubble-tea chain Baicha Baidao plunged nearly 40 per cent 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 per cent, 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 per cent, 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.

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.

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.

“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.

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