China’s Baidu closes flat on debut as investors wary of fundraising spree in city

Baidu Inc shares have closed flat in their Hong Kong secondary listing debut on Tuesday, bucking a trend of first-day pops on the bourse, as investors were wary of a fundraising flurry in the city and questioned the search company’s growth plans.

The weakened mood towards Chinese technology offerings was reinforced with video site Bilibili raising a lower-than-expected $2.6 billion in its secondary listing.

Baidu shares closed at HK$252 each which was in line with the price set for the Hong Kong listing which raised $3.1 billion.

Hong Kong’s Hang Seng Index lost 1.3% in the session.

It was the weakest debut for a U.S.-listed company debut in Hong Kong since Yum China shares dropped 5.3% in their first session in September after raising $2.2 billion. Baidu’s lackluster debut contrasted with some of the city’s other major first-day movers in 2021, such as Kuaishou Technology which gained 160% in early February. LightStream Research analyst Shifara Samsudeen said secondary listing debuts were generally not as strong as primary listings, but noted investors were wary of Baidu’s future growth and diversification plans. “We think it will take a few more quarters for the market to duly appreciate Baidu’s efforts in cloud and other initiatives and value the stock as a comprehensive internet stock,” Samsudeen, who publishes on Smartkarma, told Reuters.

Hong Kong has seen $31.4 billion raised through share sales so far this year, compared to $8.6 billion over the same period last year, prompting concerns that appetite to buy new deals could be weakening.

“There is too much paper around, the listings have been never ending and companies have raised money so easily without any real need,” said one Hong Kong fund manager who could not be named as he was not authorised to speak to media.

Baidu chairman and CEO Robin Li said the secondary listing was a homecoming for the company.

“When Baidu got listed in Nasdaq…I said Nasdaq was only one of our stops. Baidu would come back to China eventually, because China is our root. Today, Baidu finally came back home,” he told a ceremony in Beijing.

Bilibili finalised its secondary listing on Tuesday, raising a smaller sum than the company’s initial target of about $3 billion.