Sunshine Insurance shares open flat in Hong Kong debut

China's Sunshine Insurance Group Co 66963 shares opened in line with their issue price on Friday in the company's Hong Kong Stock Exchange debut.

The company raised $863 million by selling its shares at HK$5.83 each in its initial public offering (IPO).

The broader market, Hong Kong's Hang Seng Index HSI, was up 0.2% early in Friday trading.

In its prospectus, Sunshine Insurance said it had life, health, accident, property, and casualty insurance products under its brands. It had 416.3 billion yuan ($58.3 billion) in total investment assets as of June 30 this year.

The IPO is the second largest in Hong Kong so far in 2022, as the city's financial markets struggle with a low number of new share sales.

Companies have raised nearly $7 billion so far in IPOs this year, making it the worst year in a decade, according to Refinitiv data.

Russia's war against Ukraine, rising interest rates and soaring energy prices and inflation has dented the appetite of investors to buy into IPOs globally.

Demand from investors to buy into Hong Kong IPOs also remains weak with the city's retail shareholders not subscribing for all of the stock on offer to them in Sunshine Insurance's deal.

The retail portion was undersubscribed, according to the company's listing documents, while the institutional tranche was only 1.34 times covered.

Hong Kong deals were up to thousands of times oversubscribed during the market's peak in 2020 as retail and institutional shareholders fought to gain stock in nearly every IPO.

China bottled water maker Nongfu Spring 9633 for instance was more than 1,148 times oversubscribed when it raised $1 billion in September 2020.

The weak demand for IPOs in 2022, especially from Hong Kong's mom and pop investors, has been attributed to the majority of new share sales this year trading below their issue price.