China Vanke’s Onewo Makes Lackluster Debut in Hong Kong

Shares of Onewo Inc., China Vanke Co. Ltd.’s property services provider, had a lackluster debut in Hong Kong, as continued uncertainty in the property stock market urged investors to play it safe.

Shares of the property management firm opened 7.6% lower on Thursday to trade at HK$45.45 per share, lower than its offer price of $49.35. The stock last stood at HK$46.00.

Hong Kong-listed shares of real estate giant China Vanke dropped 2.3% to HK$14.12.

On the other hand, broader Hong Kong markets were in the green. The Hang Seng index was up 1.3% from an 11-year low before easing to trade 0.9% lower. Investors remained on edge due to higher US interest rates and signs of a global recession this year.

Investors’ Wariness of New Offerings

Onewo had raised HK$5.8 billion ($739 million) worth of net proceeds during its initial public offering (IPO), which was one of Hong Kong’s largest this year, and saw China Vanke hold about 60% of the group.

However, it was undersubscribed by local investors, with the company selling 82% of the shares offered to traders in the region as sentiment over new listings remained in cautious territory.

Onewo aimed to raise as much as $784 million.

IPO volumes worldwide have also been muted this year, as rising interest rates and inflation have weakened investors’ confidence in new offerings. In Hong Kong, new and secondary listings have reached $7.5 billion so far in 2022, 79% lower than the same period in 2021.

Moreover, the firm’s IPO  came at a time when China’s real estate market is faltering. Once a critical growth foundation of the world’s second-largest economy, the property sector is seeing increased debt defaults by major developers.

China Vanke has been one of the few real estate companies to maintain profit growth. Still, the sector’s overall assessment is pushing investors toward a direction where taking risks is not recommended at the moment.