PICC jumps in debut trading, lifted by strong retail demand
Shares of Chinese insurer PICC rose sharply on its debut on Friday as retail investors flooded in to speculate after Hong Kong's biggest IPO in two years.
The share price jumped 6.9 per cent to HK$3.72 as of the mid-day close in Hong Kong, after rising to HK$3.75 earlier in the morning session. The insurer priced its shares at HK$3.48, near the bottom of an indicative price range during the IPO.
Half-day trading value on the stock amounted to as much as HK$3.88 billion, accounting for 10.8 per cent of the Hong Kong market’s total trading volume as of midday on Friday. By midday, total volume on the Hong Kong market stood at HK$35.69 billion.
“We got a great number of orders from retail clients this morning to buy PICC, much bigger than the last few IPO stocks, ” said Jonathan Wang, a trader at Haitong International Securities. “This is the first large-cap, government-backed stock that has debuted in Hong Kong since the new (Beijing) leadership. Everyone believes that it won’t fall.”
Sharon Wong, director of a retail branch at Shenyin Wanguo in Hong Kong, said this could be a favourite retail stock in Hong Kong this year. “This is a jumbo deal and the retail investors just don’t want to miss it,” he said.
The six Hong Kong-listed insurers are trading at an average price-to-embedded value of 1.4 times based on figures from the latest fiscal year. PICC's price-to-embedded value ratio, a common measure for insurance companies, is set at between 1.2 times and 1.6 times in the current fiscal year ending March.
