PORTALBERITA.CO.ID - Hong Kong’s already struggling stock market is preparing for a significant influx of tradable shares next month, potentially renewing downward pressure on major indices. This scheduled event involves the expiry of lockup periods tied to recent Initial Public Offerings (IPOs) and secondary share placements.
Exchange data analyzed by Bloomberg reveals that at least HK$255 billion worth of previously restricted stocks are set to become eligible for public trading in July. This figure represents the largest monthly volume of expirations anticipated for the remainder of the current year.
This surge in available shares is a direct consequence of the high volume of company listings that occurred late last year and early this year, fueled by global enthusiasm for Artificial Intelligence (AI) investments. These listings often involve cornerstone investors and existing shareholders whose holdings are typically restricted for six to twelve months post-listing.
The potential selling pressure adds another layer of challenge for the Hang Seng Index, which has already declined by 3% this year. This underperformance is attributed to broader economic struggles within mainland China and market skepticism regarding the extensive AI spending by many Chinese technology firms.
Goldman Sachs Group projects that the total value of lockup expiries driven by IPOs in the financial hub will reach an unprecedented US$274 billion over the next twelve months. As reported by Goldman Sachs analysts, "Historical precedents suggest that equities typically experience moderate downward price pressure following lock-up expiration."
The analysts further quantified this historical impact, noting that stocks generally see a median price decline of 4% within the first three months post-expiry. According to Goldman Sachs analysts, "The median decline widens to 7 per cent six months after the shares become tradable."
Several high-profile technology and healthcare companies are among those facing substantial expirations in July, including AI developer MiniMax Group and Knowledge Atlas Technology JSC (Zhipu). Other firms like chip designer Shanghai Biren Technology and Insilico Medicine Cayman TopCo are slated for similar lockup releases later this year.
The list of affected equities also includes large dual-listed entities trading in Hong Kong, such as Sany Heavy Industry and GigaDevice Semiconductor. As reported by Bloomberg, new listings in Hong Kong generated nearly US$14 billion in the first quarter of this year, marking the city's strongest quarter since 2021.
Willer Chen, an analyst at Mizuho Securities, pointed out the specific vulnerability of certain listings due to prior funding rounds. As noted by Willer Chen, "For tech and healthcare companies, multiple funding rounds prior to IPO typically result in greater lockup expiry pressure due to the large share amounts and low holding costs."
