China Tourism Duty Free postpones Hong Kong listing amid sluggish capital market conditions

stocks have tumbled

China Tourism Group Duty Free has postponed its multibillion initial public offering in Hong Kong with the world’s largest travel retailer by sales blaming sluggish market conditions for the decision.

The Shanghai-listed company said on Friday that it will pause progress of its H share listing as the coronavirus pandemic has caused a relatively big shock to the global economy and as capital market conditions remain sluggish.

The news came on the same day that Chinese ride-hailing giant Didi Global said it would commence the process of removing its stock from the New York Stock Exchange and seek a listing in Hong Kong, amid an ongoing cybersecurity probe by regulators.

“After careful consideration, the company has decided to postpone progress of its H share listing, and future arrangements will depend on market conditions,” said China Tourism in its announcement.

The company was targeting to raise between US$5 billion and US$7 billion in what was set to be Hong Kong’s biggest IPO in 2021 – according to several media outlets, citing people familiar with the situation, including a report by eastmoney.com.

The deal’s suspension may unsettle market nerves further in Hong Kong, where stocks have tumbled this week on regulatory concerns and after Didi said it would delist from the US. The news also comes as a blow for the Hong Kong stock exchange, which has been working hard to secure a top 3 slot among exchanges for handling IPOs in 2021.

China Tourism said it has “comprehensively” finished preparations for work related to its IPO, including the seeking of onshore and offshore regulatory approvals. The HKEX had also given a green light to the company, according to an earlier South China Morning Post report, which cited a person familiar with the matter.

China Tourism’s stock added 1.1 per cent to 204.06 yuan in Shanghai on Friday, but was down 3.4 per cent for the week. The shares have fallen in recent weeks amid rising concern over the strength of China’s economic recovery and flare-ups of Covid-19 cases across the country.

China Tourism is backed by its parent – state-owned CTG, previously known as China Travel Agency Hong Kong, which has a 53.3 per cent stake.

China Tourism has said the fast development of Hainan’s tax-free market would support its future development. The Beijing-based company claims to have an almost 100 per cent share of the offshore duty-free retail market on the island, where it opened its first offshore duty-free store in downtown Sanya in 2011.

China’s southernmost province is developing into a go-to shopping destination, with retail revenue forecast to hit US$46.5 billion by 2025. Hainan looks set to compete with Okinawa in Japan and Jeju in South Korea, the only other islands in Asia with similar offshore duty-free markets, analysts say.

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