Food deliverer of Meituan Dianping Photo: Baidu
Food deliverers for Meituan. Photo: Baidu

On paper, Hong Kong is the undisputed queen of the Initial Public Offering (IPO), having topped the world in raising fresh capital for new companies in the past decade.

Yet despite this, most of the so-called mega offerings were under-subscribed and displayed poor post-market performance.

A case in point is Meituan Dianping, China’s largest food deliverer, whose IPO today was reported to have been barely oversubscribed.

Read: Meituan-Dianping expected to kick off IPO roadshow

Tencent-backed Meituan received 1.5 times the total amount of US$4.4 billion capital it had hoped to raise. Over 17,000 retail investors bought into Meituan, which has never made money in its seven years of operation.

Both subscription numbers are deemed to be low, especially when compared with China Literature, a Tencent e-book subsidiary, whose share price surged with a 90% increase to close at US$94 on its opening day last November.

But even China Literature fell below its offer price of US$55 last month in a development that some fear may spell the end of the IPO frenzy. Its price at today’s closing was $47.40.

For those keeping an eye on the performance of stocks since the Sino-American trade war began, “technology” and “China” might now be the two words to avoid in the market.

Read: Chinese food sector IPOs set to raise US$5 billion

Another example is China Tower, the world’s largest IPO this year. The network construction company owned by the three largest mainland mobile players – China Mobile, China Unicom and China Telecom – raised US$6.9 billion on August 8 despite being merely 1.36 times over-subscribed.

Its post market performance was even worse. China Telecom debuted last month with a flat opening before dropping as much as 21%. It has since remained below its IPO price.

Read: China Tower stands to become No.1 IPO in the world

Ditto for the high-profile Xiaomi Corp, which slashed its capital target by half to US$4.7 billion on July 9.

Shares in the Chinese smartphone manufacturer and home appliance maker then took a roller coaster ride with a surge of over 30% in the first few trading days before tailing off. This month it is trading below IPO price.

Hong Kong was expected to raise over HK$200 billion (US$25.6 billion) in IPOs this year thanks to such mega listings, and for the last decade it has been one of the top three IPO markets in the world, along with New York and London.

Read: Hong Kong IPO stocks suffer volatility in global markets

But as of the end of June, the Hong Kong market IPO market had raised only HK$50.3 billion, making it number 5 in the global market.

Onlookers wonder if Hong Kong will be able to sustain its reputation for raising vast sums of capital, and point to a need to keep IPO investors happier.