Tianqi Lithium plunges 11% in biggest Hong Kong debut this year

SHARES of Tianqi Lithium fell as much as 11 per cent in Hong Kong, following the largest share sale in the Asian financial hub this year.

The H-shares dropped to as low as HK$72.65 in early trade on Wednesday (Jul 13). The supplier of the key material used in batteries, already listed in Shenzhen, sold the stock at HK$82 a piece in a secondary listing in Hong Kong. That was the top of a marketed range in an offering that raised about HK$13.5 billion (S$2.4 billion).

The slump suggests investors remain wary of trading new-listed stocks in Hong Kong's exchange. Big offerings have dwindled this year amid rising inflation, hawkish central banks and a jump in volatility that has led the Hang Seng Index to retreat more than 10 per cent this year. Three other companies that debuted in the city on Wednesday also dropped.

The Hong Kong listing caps a major turnaround for Tianqi after a debt crisis just 2 years ago forced it to sell stakes in prize assets, and raised questions for management. The company's revival was aided by an eye-popping gain of more than 1,000 per cent for lithium prices since mid-2020.

Tianqi mines lithium in Australia and produces compounds and derivatives in China. The Chinese producer first brought up a secondary listing in 2018 but shelved the plan amid falling lithium prices and liquidity problems. In 2020, the Chinese company sold shares in Australia's Greenbushes, one of the world's most coveted lithium mines, to Perth-based IGO for US$1.4 billion to help repay debt.

A fresh global push for electrified transport is fuelling a demand boom for lithium - a key material used in EV batteries. According to BloombergNEF, lithium prices could stay elevated amid a tight market this year.

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Tianqi Lithium raises HK$13.5b in year's biggest Hong Kong listing: sources

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Tianqi's Hong Kong share sale has attracted 7 cornerstone investors including LG Chem and battery maker CALB, the prospectus shows. In another sign of a brighter outlook for Tianqi, its lithium refinery in Australia's Kwinana - a venture between the company and IGO - delivered its first batch of battery-grade lithium hydroxide in May.

Most companies that debuted in Hong Kong this year fell on their first day of trade, data compiled by Bloomberg show. Retailer Miniso Group Holding, wealth management company Noah Holdings and piped natural gas distributor Huzhou Gas slumped as much as 4.9 per cent, 7.3 per cent and 9.5 per cent, respectively, on their first day of trade on Wednesday.

Tianqi's shares plunged in Shenzhen on Monday after the wife of one prominent investor raised concerns about the firm's valuation ahead of the secondary listing. The shares in the mainland touched an all-time high last week. Morgan Stanley, China International Capital and CMB International Capital are joint sponsors of the Hong Kong offering. BLOOMBERG