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Bilibili debuts in Hong Kong at a discount, second IPO to fizzle in a week, as CEO blames 'black swan' slump in US-listed Chinese stocks

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Chairman and chief executive officer Chen Rui, who controls 43.7 per cent of voting power, cited a US law to compel foreign companies to grant access to their financial audits as "black swan" event, which triggered a record slump in US-listed Chinese stocks last week shortly after the company concluded its stock offering on March 23.

"The general situation of the stock market is relatively bad," Chen said during an online media briefing on Monday. After Bilibili priced its IPO, "US-listed Chinese stocks have experienced the biggest drop in recent years, which should be regarded as a black swan event."

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An S&P Index of 50 US-listed Chinese stocks slumped 11.7 per cent last week, according to Bloomberg data, the steepest drop on record since its inception in June 2015. Baidu, Pinduoduo, JD.com, NIO Inc and Alibaba Group Holding (the owner of this newspaper) are the five biggest index members.

The stock opened 2.2 per cent below its offer price and recently traded at HK$790 local noon trading break. It earlier fell to as low as HK$753, a 6.8 per cent discount to its IPO price. The company's ADS, which is worth one Hong Kong-listed share, slumped 11 per cent last week to US$97.08.

Chen reminded investors about Bilibili's own New York debut on March 28, 2018 after pricing 42 million ADSs at US$11.50 each. The stock fell in the first two trading days, and traded below its IPO price through May 11.

"I believe the company will prove its value in the future," the 43-year old CEO said. "Today, there is a feeling of 'yesterday once more.' We also broke (below IPO) when we listed on the US market. But I said at that time that no one will remember this in the next 10 years."

Bilibili has slumped in the past six weeks in the US, erasing US$19 billion from its market value. The pressure may have been magnified by the presence of Tencent Holdings and Alibaba among its major shareholders, whose businesses have also been targeted in the clampdown.

Tencent owns 11.6 per cent of Bilibili while Alibaba (the owner of this newspaper) has interest in 8.2 per cent after the Hong Kong offering. Tencent dropped 0.7 per cent to HK$615.50 while Alibaba slipped 0.1 per cent to HK$215.80 in Hong Kong trading.

Hong Kong's stock exchange has approved 22 new listings so far this quarter involving US$16.2 billion of proceeds, according to Bloomberg data. There were 37 deals in the same period a year earlier which generated US$1.9 billion.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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