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Hong Kong Share Sale Bonanza on Track as JD Is Oversubscribed

Julia Fioretti

(Bloomberg) -- China’s No. 2 online retailer JD.com Inc.’s Hong Kong share sale of as much as $4.1 billion is multiple times oversubscribed by institutional investors, people familiar with the matter said, as the financial hub enters a second week of multi billion dollar stock offerings.

JD’s offering is set to be the world’s second-biggest this year and comes on the heels of Chinese Internet company NetEase Inc.’s $2.7 billion Hong Kong share sale last week. After a muted start to the year in terms of initial public offerings due to the coronavirus pandemic and volatile markets, Hong Kong is roaring back to life with a slew of stock offerings.

The highly sought after share sales have helped drive a surge of capital inflows, with the city’s currency climbing to the strong end of its permitted trading band late last week even as concern about looming national security legislation has spurred speculation about outflows.

The planned national security legislation to be imposed on Hong Kong as well as the resumption of protests had fanned concerns about the city’s future as a leading financial hub, even as the head of its stock exchange brushed away such fears.

Prior to NetEase last week, just $3.5 billion had been raised through IPOs in Hong Kong, which was the world’s busiest listing venue last year. This week is set to beat that tally easily with JD, which is due to price on Thursday U.S. time, while China Bohai Bank Co. is planning to launch its own $2 billion IPO later in the week.

Escalating tensions between Washington and Beijing are increasing risks for Chinese companies like JD and NetEase that are seeking to broaden their investor base. Their Hong Kong listings follow Alibaba Group Holding Ltd.’s $13 billion stock sale last year, hailed as a homecoming for Chinese companies and a win for the Hong Kong stock exchange. The city lost many of the largest tech corporations to U.S. bourses because it didn’t allow dual-class share voting at the time -- a requirement that’s since been relaxed.

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