(Yicai Global) Oct. 11 -- Shares in China's leading producer of lithium by production capacity plunged 28 percent on the first day of trading in Hong Kong.
Shares in Jiangxi-based Ganfeng Lithium [HK:01772], a key supplier to the country's vast new energy vehicle battery sector, closed at HKD11.76, down 28.7 percent compared to its IPO price, while the company's A-share counterpart [SHE:002460] closed at CNY26.0 at the 10 percent trading limit on the previous day.
The stock's bad first day on the Hong Kong bourse was indicative of the major slumps that took place globally. The Hang Seng Index plummeted below 26,000 points at the open, marking a 15-month low, and closed down 3.65 percent at 25,266.37. Meanwhile, in China's mainland, the main index, the Shanghai Composite, fell 5.2 percent and the Growth Enterprise Index slid 6.3 percent for the day.
The neighboring major Asia-Pacific exchange indexes like the Japanese Nikkei index and Korean Kospi also suffered great losses.
Ganfeng Lithium's IPO price of HKD16.5 (USD2.11) per share was at the bottom of its planned price range, which reflects the market's cold reception, and foreshadows the slump today. The company aimed to raise HKD3.2 billion (USD408.3 million) through Hong Kong IPO, the company announced late yesterday. Some 58 percent of the funds, according to its prospectus, would be used for upstream lithium resource purchases and investment, while 22 percent would finance Lithium Americas, Ganfeng Lithium's partially-owned unit. The rest would be used for research of solid-state lithium batteries, as well as operations and general purposes.
The company also aims to invest up to CNY500 million to build a production line with an annual output of 25,000 tons of battery grade lithium hydroxide in Jiangxi province to meet the increasing market demand, the company said last month.
Editors: William Clegg