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Deals

Yum China shares fall on Hong Kong debut amid global markets uncertainty

HONG KONG (Reuters) - Yum China Holdings Inc 9987.HK dropped as much as 6.3% on its Hong Kong market debut on Thursday, bucking the recent trend of first day pops for local listings with global markets' volatility weighing on investor sentiment.

FILE PHOTO: The booth of fast food restaurant company Yum China Holdings Inc. is seen at an investment and trade fair in Hefei, Anhui province, China May 17, 2017. REUTERS/Stringer

The operator of KFC, Taco Bell and Pizza Hut restaurants in China had sold 41.91 million shares at HK$412 each, raising $2.22 billion in the listing.

In early trade, Yum China hit a low of HK$386.2 ($50.35). The Hang Seng Index .HSI traded 0.15% higher.

Steven Leung, executive director of institutional sales at UOB Kay Hian in Hong Kong, said, “Investors whom subscribed for the stock, are unlikely to hold for long amid the softer tone in the U.S. stock lately.”

The New York-listed Yum China YUMC.N shares, valued at $22.3 billion, ended 1.7% higher at $53.2 on Wednesday, but the stock is down 8.7% from its recent peak on Sept. 1.

Asia’s stock markets snapped their longest losing streak since February on Thursday and rose following a bounce on Wall Street, though subdued trade in currency, commodity and bond markets suggested investors remain cautious about the outlook.

Hong Kong-based Geo Securities’ chief executive, Francis Lun, said the stock’s weakness was also driven by highly leveraged retail investors rushing to dump their shares following its lower opening.

“People who apply for stock in these deals are looking for quick money, they borrow very heavily so if a stock falls they need to get out,” he said.

The weaker performance reverses a recent trend of initial public offerings and secondary listings performing strongly in their Hong Kong debut. Nongfu Spring Co Ltd 9633.HK jumped 85% when it began trading on Tuesday..

The two largest secondary listings of 2020 in Hong Kong both surged in their debuts. Netease Inc 9999.HK shares opened up 8% and JD.com Inc 9618.HK rose 5.75% when the stocks began trading on the Hong Kong market in June.

Reporting by Scott Murdoch and Donny Kwok in Hong Kong; Editing by Muralikumar Anantharaman and Christopher Cushing

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