After raising about $1.7 billion in the largest listing in Hong Kong so far this year, Tianqi Lithium’s shares experienced a 10% decline in value on Wednesday.
The share price was below the offer price of HK$82 ($10.45) per share, trading at around 74.50 Hong Kong dollars ($9.49). Before cutting back some of the losses, it fell as low as HK$72.65.
One of the top suppliers of components for rechargeable batteries used in electric vehicles is Tianqi Lithium, which was already listed in Shenzhen.
“We have already been listed in China, which is a great, significant platform for financing. Frank Ha, the CEO and executive director of Tianqi Lithium, said on CNBC’s “Streets Signs Asia” that it is however restricted in China “this Wednesday.
“As part of our global expansion strategy, we are entering the Hong Kong market. A global financing platform needs to be created. Because of this, we gave the situation some thought before evaluating it. I believe that now is the best time to come here and list in the market “Added he.
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According to its regulatory filings, the company sold 164.12 million shares during its secondary listing in Hong Kong. The Hong Kong stock market had been without a significant offering for several months; between January and June, funds raised were down more than 90% from the prior year.
According to the prospectus, seven cornerstone investors have shown interest in Tianqi’s Hong Kong offering and are expected to purchase about 38 percent of the listing.
The outlook for Tianqi Lithium
Ha claimed that the electric vehicle market is expanding beyond China and is showing strength on a global scale.
“We can see that there is still a very strong demand for EV in Europe and in the other places in the world,” he said. Ha added that as more nations commit to becoming carbon neutral by 2050, demand for electric vehicles is likely to remain high over the next five to six years.
According to Dennis Ip, head of power and utilities at Daiwa Capital Markets, the market sentiment at the moment is quite difficult, but given Tianqi Lithium’s fundamentals, the company’s earnings potential is better than others given “very high lithium prices.”
He said on Wednesday on CNBC that “Tianqi Lithium share price is very driven by the lithium compound prices as well.”
The macroeconomic environment can influence demand, he continued, so “we still think that lithium price will remain strong in the second half of this year, but next year will be challenging.”
