Shares of artificial intelligence (AI) chipmaker Black Sesame International tumbled as much as 35 per cent on their debut, dealing a blow to Hong Kong’s efforts to attract more technology listings.
The Xiaomi-backed company’s shares fell to as low as HK$18.28 on Thursday (Aug 8) on the Hong Kong Stock Exchange. They had been priced at HK$28, the bottom of the marketed range in an initial public offering (IPO) that raised about HK$1 billion (S$170 million).
Its listing comes as global markets are recuperating from a rout – including downturns in AI stocks – earlier this week. The stock’s reception is a setback for Hong Kong as it strives to revive its equity market, which has seen moribund volumes of IPOs and liquidity concerns stemming from the region’s economic sluggishness. Hong Kong Financial Secretary Paul Chan was among the attendees of Black Sesame’s listing ceremony in Hong Kong on Thursday.
Nearly 95 per cent of the shares offered were snapped up by just five investors prior to the first day of trading, according to a Wednesday filing from the company, which specialises in chips used in autonomous driving systems. A subsidiary of Guangzhou Automobile Group and an investment unit of Ningbo Joyson Electronic participated as cornerstone investors.
“Given the concentrated share take up, combined with the tight float, listing performance could be distorted,” Clarence Chu, an analyst at Aequitas Research who publishes on the platform Smartkarma, said in a note.
The deal’s international portion was subscribed 1.05 times, according to the filing. That reflects weak demand from institutional investors, Chu said.
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IPOs in Hong Kong have raised US$2.44 billion so far this year, down 7.6 per cent from the same period in 2023 and far below 2021 levels, according to data compiled by Bloomberg.
Exchange operator Hong Kong Exchanges and Clearing last year set a lower threshold for advanced technology companies, including those in AI and semiconductors, to list in the Chinese territory under a set of rules known as Chapter 18C.
The rules came into effect as the tech war between Washington and Beijing was brewing, with the Biden administration placing broader curbs such as limiting sales of AI chips to Chinese customers.
QuantumPharm, which bills itself as an AI-powered research and development platform for drugmakers, in June became the first 18C company to list. Its shares have since risen 10 per cent. BLOOMBERG
