HONG KONG (Reuters) - Shares of Chinese franchised hotel operator Huazhu Group Ltd 1179.HK traded as high as 5.1% above its Hong Kong listing offer price on Tuesday, bucking the negative sentiment across Asian equities markets.
The stock rose as high as to HK$312 after it opened at HK$305 each in their Hong Kong debut. The shares last traded at HK$311, still up 4.7% from their offer price of HK$297 each.
Huazhu Group HTHT.O offered 20.4 million shares, raising HK$6.06 billion ($782 million) in its secondary offering in Hong Kong to fund expansion of its hotel network, upgrade its technology platform and pay down debt.
The stronger performance comes after Yum China 9987.HK shares slid 5.3% when the company made its listing debut in Hong Kong on Sept. 10.
The weak debut prompted analysts to question whether investor demand for future secondary listings in Hong Kong would remain strong.
Huazhu said in a statement early on Tuesday that a report by shortseller Bonitas Research asserting the group overstated its profits and assets was without merit and contained errors, unsubstantiated statements and misleading conclusions.
Huazhu’s New York listed stock dropped 3.6% on Monday.
Brokerage Daiwa Capital said in a research note on Monday a secondary listing of Huazhu in Hong Kong would be a catalyst for a re-rating of the stock as it expected it to be popular among southbound investors once it is granted Stock Connect eligibility.
Daiwa also said some of the net proceeds to be used to reduce the firm’s gearing should assuage investors’ concerns of an over-stretched balance sheet.
Reporting by Scott Murdoch and Donny Kwok; Editing by Muralikumar Anantharaman and Stephen Coates
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