Nongfu Spring’s bottled water in a supermarket in Hangzhou, China.
Costfoto | Barcroft Media | Getty Images
SINGAPORE — Shares of Chinese bottled water giant Nongfu Spring surged more than 85% in their debut on the Hong Kong stock market on Tuesday.
The stock opened at 39.80 Hong Kong dollars per share ($5.14) before inching down to around 35.00 Hong Kong dollars ($4.52). Its initial public offering price was 21.50 Hong Kong dollars ($2.77), allowing the company to raise around $1.1 billion.
Dickie Wong, executive director of Kingston Securities, told CNBC’s “Squawk Box Asia” that Nongfu Spring was “one of the hottest IPO ever” in the history of Hong Kong’s stock market. He pointed out that the IPO was oversubscribed by 1,148 times.
Wong explained that investors are interested in the stock not only for its “fundamentals or its very high profit margin.” He added that there has been a general lack of investment opportunity given that valuations of many stocks — especially technology or internet companies — are high.
“So investors think (participating) in a new IPO is always the best strategy,” he said.
Nongfu Spring sold 388.2 million shares in its IPO deal. Its cornerstone investors include fund manager Fidelity, hedge fund Coatue and Singapore sovereign wealth fund GIC. Its IPO is one of the largest in Hong Kong this year.
Originally published on CNBC