Hua Hong Semiconductor, the world’s second-largest initial public (IPO) this year, made a stellar debut on mainland China’s Star Market despite being issued at twice the price of its Hong Kong-listed shares, buoyed by mainland investors’ zeal for the country’s chip self-sufficiency, reports the South China Morning Post. The mainland’s second-largest semiconductor maker opened at RMB 58.88 in Shanghai on Monday, 13% higher than the offer price of RMB 52. The stock jumped by as much as 15% in morning trading before trading 5.5% higher at RMB 54.86 at the break. About 46 million shares changed hands, representing 44% of its free-floating shares.
It represented a 145% premium to Hua Hong’s H shares, which dropped 7% to HK$24.45 in Hong Kong trading, replicating the debut of its bigger rival. The mainland’s biggest chip maker, Shanghai-based Semiconductor Manufacturing International Corporation (SMIC), raised RMB 53.2 billion ($7.4 billion) in an IPO – the largest fundraising ever on the Star Market – in July 2020. Its shares skyrocketed 246% when they began trading on July 16, 2020.
“Traders had all expected a first-day jump in Hua Hong shares because of the high profile of the chip industry,” said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai. “They believe that the country’s top chip makers will be able to catch up with foreign rivals sooner or later.”