Ant will fly!
IPO, they said, is all about timing. Even pig will fly in a bull market.
Hong Kong’s IPO market in the past year was spurred by Jack Ma, whose Alibaba Group launched a secondary listing last November and now all eyes are on its sister company Ant Group, which is set to debut in three weeks.
Alibaba Group, now multiple times larger than HSBC Group by market value, knows best how to time the market.
Last year, Alibaba became the first US-listed Chinese giant to seek a Hong Kong listing. Its success inspired many other tech firms such as JD.com to tap Hong Kong market as a hedge to the sour China and United States relationship.
With a target valuation of US$250-280 billion according to reports, Ant Group is set to become the world’s largest IPO this year.
It is a myth that the market tended to hold up well before the mega IPOs until its closing and market is likely to correct after.
During the surprise summer stock rally, I did a little experiment. I decided to participate by buying a minimum lot of new and hot IPOs, which were hugely oversubscribed for at least 500 times if not more than 1,000 times.
As expected, price for these hot IPOs usually went up sharply because of the strong demand. As such, the allotment was low, and usually less than 10 per cent of the orders placed by investors who fancied getting a piece.
I chose not to go for leverage because that would have made the IPO game even more complicated due to the cost of the borrowed money. After all, I am a small investor who targets to win a few thousand dollars.
Starting from JD.com, which sold shares in early June, I began this IPO exercise by subscribing diligently for 10 other stocks until early October.
But I did not manage to get even one stock out of the 11 including the high profile Nongfu Spring and a few biotechnology stocks (which causally went up 100 per cent on their first day).
Mathematically it is quite impossible to get all stocks you want, but the chance of not getting any stocks in 11 trials is also low.
In between, I spent close to HK$130,000 in this exercise but it did not yield a single dollar of return for me. In fact I was charged HK$600 for service.
As with other local investors who would easily forget about their failure in stock market, I plan to give Ant Group one more chance. After that, I would wash my hands because the magic Ma probably has no more rabbit to pull in the foreseeable future.
Copyright: Project Syndicate
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