Chinese firms go on fundraising spree amid rush of easy money
The surge in inflows created by the waning of US exceptionalism and the Beijing-Washington trade truce has fuelled one of the most active fundraising booms the region has seen in years. By far the biggest deal has been the share offering by Chinese electric vehicle (EV) battery maker Contemporary Amperex Technology Co Limited (CATL), but that's just part of a wider groundswell.
Hong Kong share sales have raised US$25.8 billion this year, about 34 per cent higher than the total for all of 2024, according to data compiled by Bloomberg. Mainland companies issued US$2.8 billion of US dollar bonds in the second week of May alone, one of the busiest stretches in Asia this year, data compiled by Bloomberg show.
'The worst-case scenario of super high tariffs is behind us,' said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong. The market conditions in China appear to be more supportive than in previous years, while interest-rate cuts from the People's Bank of China have boosted liquidity, he said.
CATL, as the battery giant is known, raised US$5.2 billion in its Hong Kong Kong debut on Tuesday (May 20), the largest listing in the world this year and the biggest in the city in four years. The shares jumped 16 per cent on their first trading day.
The outlook is also improving for troubled mainland developers that had been largely shut out of US dollar bond markets due to the property debt crisis. Seazen Group is meeting investors this week about a potential US dollar debt sale, which may make it the first public bond offering by a major Chinese private-sector developer in more than two years.
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Sharp turnaround
The fundraising boom is a stark turnaround from just a few months ago, when geopolitical uncertainty and climbing interest rates had throttled demand for Chinese assets. Now, the thaw in US-China relations has encouraged money managers from London to Singapore to boost exposure to China amid optimism the country may be shaking itself free from years of sluggish growth.
'The percentage of the allocation to the global money already picked up significantly' for mainland-traded Chinese firms listing in Hong Kong this year, said Shi Qi, deputy head of capital markets at China International Capital Corp in Hong Kong, speaking on Bloomberg Television on Wednesday.
'We see Middle East sovereign funds and also some South-east Asian sovereign funds as well as other global long-onlys actually add their allocation to China,' she said.
There's a healthy pipeline of future Chinese share sales, many of which are by companies without heavy reliance on US exports. Those lining up to list shares in Hong Kong include drugmaker Jiangsu Hengrui Pharmaceuticals and sensor manufacturer Hesai Group. BLOOMBERG
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