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Hang Seng Index
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Hong Kong stocks snap six-day rally on concerns Ant IPO to soak up liquidity, spike in global Covid-19 infections

  • Ant Group discloses IPO prices in Shanghai and Hong Kong offerings, set to drain as much as HK$800 billion in subscription cash
  • Most stock gauges decline across Asia-Pacific market in tandem of overnight US losses amid stimulus impasse

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People walking past a electronic board showing the Hong Kong stock prices near the Hong Kong Stock Exchange building in Central. Photo: Warton Li
Zhang Shidongin Shanghai
Hong Kong stocks dropped for the first time in seven days, as the rout in US and China equities weighed on sentiment and the impending blockbuster stock offering by Ant Group stoked concerns about a liquidity squeeze. HSBC rose to a two-month high as the UK lender considers paying dividend.
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The Hang Seng Index retreated 0.5 per cent to 24,787.19 at the close. The market was shut for a public holiday a day earlier. The Shanghai Composite Index held near a two-week low, adding 0.1 per cent to 3,254.32 in a late rebound. The S&P 500 Index slid 1.9 per cent overnight, the most in a month, amid an impasse in fiscal relief package before the November 3 US presidential election.

Caution prevailed in the Asia-Pacific region, with Japan’s Topix trading at its lowest level in three weeks, as Covid-19 infections hit a record in the US in recent days and Europe was a step closer to imposing the strictest restrictions to contain the pandemic. In a sign of the continuing China-US tension, Beijing announced to sanction three US companies including Boeing’s defence unit for weapon sales to Taiwan.

“Markets are likely to remain sensitive to the fiscal stimulus package that is still being negotiated between the two parties,” said Tai Hui, a strategist at JPMorgan Asset Management in Hong Kong. “But the potential optimism around a deal could be dampened as we approach the election day. The recent surge in infections in the US and Europe is also denting market sentiment.”

Ant Group on late Monday announced the prices for its stock offerings in Shanghai and Hong Kong, a move that could raise US$34.5 billion in what would be the world’s largest initial public offering (IPO). It started taking orders from Tuesday.

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Banks and brokers in Hong Kong are offering record margin loans of almost HK$300 billion (US$38.7 billion) for retail investors to buy into IPO shares this week, which is on course to be the most popular offering ever in the city. It could freeze as much as HK$800 billion of subscription money, surpassing the recent record of HK$677 billion in the Nongfu Spring IPO two months ago.
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