HK block trade bonanza raises US$1.8b in one day

Hong Kong

ISSUERS took advantage of Asian stocks hitting fresh records on Monday to sell US$1.8 billion worth of stock in five block trades that were all increased in size, a new year frenzy highlighting bullish sentiment in the market.

The flurry of share sales came in a narrow window before the Georgia Senate runoffs in the United States on Jan 5. US stocks had slipped on Monday as investors fretted about the country's nascent economic recovery following a surge in global coronavirus cases.

The parent of Chinese pharmaceutical firm Wuxi Biologics Cayman, a familiar presence in Hong Kong's equity capital markets, raised US$1.3 billion in a placement, selling 20 million additional shares in the biotech company. Warburg Pincus fetched US$188 million from the sale of mainland vitro fertilisation service provider Jinxin Fertility Group shares, which was also upsized.

"Definitely lots of bullish sentiment swivelling in the market right now, particularly when it comes to the Chinese market with the interest to hunt for returns at the start of the year," said Jingyi Pan, market strategist at IG Asia.

Shareholders sold stakes on Monday in three other companies in Hong Kong: Hygeia Healthcare Holdings, China East Education Holdings and Kingboard Laminates Holdings.

Tuesday's runoff in Georgia will determine whether Democrats have control of Congress and so can push President-elect Joe Biden's agenda. But much like the November election, the results are likely to be delayed for days or even weeks. Deal activity slowed during the US election last year, showing that investors hold off big bets during key political events.

Apart from buoyant markets, the short window before the holidays is also spurring the boom in share sales. January is often a busy time for additional equity sales in Hong Kong, as the upcoming Chinese New Year holiday tends to make the period too short to carry out initial public offerings. BLOOMBERG