Brokerages in Hong Kong are preparing a range of measures to attract retail investors for the upcoming initial public offering (IPO) of Chinese fintech giant Ant Group.
A source from an online Hong Kong brokerage said to 21st Century Herald that it was providing investors with a maximum 20x leverage to subscribe for Ant Group’s H-shares.
According to the source multiple online brokerages in Hong Kong are also connecting the US and Hong Kong stock accounts of their clients, in order allow investors to directly use the greenbacks to obtain Ant Group shares without needing to first convert them into Hong Kong dollars.
The source said that Hong Kong IPO’s are an intrinsic source of arbitraged investment, given that many enterprises that list in the city provide significant discounts to attract more investors, enabling investors to immediately capitalise upon primary and secondary market price disparities.
For this reason many online brokerages are making the effort to attract diffuse retail investors to participate in the Ant Group IPO, in order to maximise client acquisition via the promise of arbitrage investment effects.
“However, the price discount provided for the Ant Group H-share IPO will be comparatively small,” said the source.
Another source from a Hong Kong brokerage that it had already raised around HKD$26 billion to provide to investors for the leveraged purchase of Ant Group H-shares.
“We are currently communicating closely with multiple banks, and in future will increase the new financing quota for Ant Group,” said the source.
Ant Group’s dual listing on the Shanghai and Hong Kong bourses as both an A-share and a H-share is expected to raise around USD$35 billion according to some sources, making it the largest IPO in history ahead of Saudi Aramco’s previous $29 billion fund-raising.