Dongguan Rural Commercial Bank, Transcenta weakens in Hong Kong debut

By Clarence Leong

Shares of two Chinese companies slumped when they debuted in the Hong Kong market on Wednesday, reflecting weak sentiment recently among global equity investors.

Transcenta Holding Ltd., a clinical-stage biopharmaceutical company, lost up to 25% in morning trading, while Dongguan Rural Commercial Bank Co. lost 18%. Transcenta stock last traded at HK $ 12.30, while Dongguan Rural Commercial Bank was at HK $ 6.56.

Sentiment towards stocks of Chinese companies has deteriorated in recent months amid Beijing’s crackdown on industries spanning technology, real estate development and extracurricular tutoring services. Hong Kong’s benchmark Hang Seng has lost nearly 17% in the past three months.

The Dongguan Rural Commercial Bank raised net proceeds of HK $ 8.88 billion ($ 1.14 billion) after valuing its offer at HK $ 7.92 per share. The bank, China’s fifth-largest rural commercial bank by assets at the end of 2020, said it plans to use the proceeds to strengthen its capital base and support sustainable growth.

Transcenta had raised net proceeds of HK $ 574.4 million on its IPO, with the share price being HK $ 16.00 each, at the high of its indicative range.

It plans to use most of the proceeds to fund research and development and clinical trials.

The fundraising market in Hong Kong has attracted many Chinese companies, ranging from real estate and technology to pharmaceutical companies, to list their shares on the local stock exchange. A total of 46 companies raised more than US $ 27 billion in the first half of the year through share offerings in the Asian financial hub, more than double compared to the same period last year .

Write to Clarence Leong at [email protected]

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