An IPO, or Initial Public Offering, is a type of public offering where shares of a company are sold to investors. IPOs are often done by companies looking to raise capital to expand their businesses.
When a company goes public, it will offer a certain number of shares at a set price. The price is determined by the investment bankers who work with the company on the IPO. Once the IPO is priced, the shares will be listed on an exchange and can be traded by investors.
There are three upcoming IPOs in Hong Kong that forex traders should watch. They are all set to list within the next few months and could offer exciting opportunities for those looking to trade the markets.
The first IPO is that of the Sequoia Capital China-backed Leapmotor. The company is set to list on the Hong Kong Stock Exchange later on in the year for $1 billion US, according to Bloomberg.
Leapmotor is a Hangzhou-based Electric Vehicle firm, which is also backed by the government. It has received over 70,000 pre-orders and delivered over 44,000 vehicles so far, as of November 2021, and it is looking to gear up for a strong IPO.
Another IPO to watch is that of Xiaohongshu, or Little Red Book, a social eCommerce app known as China’s answer to Instagram. The company is not set to list on the stock exchange on any specified date, but it has certainly seen great growth in the past year.
Little Red Book is based in Shanghai, but it is backed by investors such as Singapore state investor Temasek Holdings, Tencent, and Genesis Capital. The company has been valued at $20 billion US as of November 2021.
Little Red Book has a strong market position in mainland China, and Bloomberg reported in early 2022 that the company was considering shifting its IPO from the US to Hong Kong, with the aim of raising at least $550 million US.
Little Red Book’s listing on the Hong Kong Stock Exchange will be a significant event for the city’s IPO market if it happens. The company’s share price will be expected to be volatile in the weeks leading up to its listing date as investors speculate on its prospects.
The third IPO to watch out for is that of Beijing Fourth Paradigm Technology, a Beijing-based artificial intelligence (AI) unicorn who is peers with AI companySenseTime. SenseTime listed on the Hong Kong Stock Exchange (HKEX) in December 2021, and it has been widely speculated that Beijing Fourth Paradigm Technology will follow in its footsteps.
This company has an impressive array of investors backing its development, including, but not limited to, Sequoia Capital, Sinovation Ventures, Lenovo Capital, and Primavera Capital Group. As a result, investors have high hopes for its IPO.
Beijing Fourth Paradigm Technology is expected to raise around $600 million US if it goes public and begins to offer shares to the wider market. Last year, the company reported a 105% year-on-year growth in revenue, ending 2021 with 942 million yuan. If speculation is to be believed, it would make this AI company one of the most promising upcoming IPOs in Hong Kong, as its growth potential is looking positive.
The three IPOs mentioned are all speculated to list either by year’s end or a little further down the road. They offer exciting opportunities for those looking to trade the markets with a good growth potential and seemingly stable outlooks. Currently, all of these companies have strong market positions. However, due to the volatile nature of the markets, investors should always exercise caution when investing in an IPO and use a reputable and experienced online broker.