Finally, three Hong Kong IPOs trade up on their debuts

The latest three initial public offerings to hit the Hong Kong market traded up on their debuts yesterday, putting an end to the recent spate of poor aftermarket performance. And, in an encouraging sign that this wasn't a one off, grey market trading in Wynn Macau suggested the casino operator will open about 2% above its IPO price when it starts trading today.

 “We are now seeing a more normal IPO market, with deals trading more on fundamentals and valuations than on market sentiment,” said an equity capital markets banker.

The best performer yesterday was Ausnutria Dairy Corporation, which soared 27.5% above its IPO price to HK$5.10. The producer of baby milk powder last week priced its IPO near the bottom of the indicative range, raising a total of $154 million.

Coming in second was Yingde Gases, which added 12% to its IPO price, closing at HK$7.84. The gas producer priced its deal at the middle of the indicative range. The IPO bringing in the smallest returns yesterday was Sichuan-based iron ore producer China Vanadium Titano-Magnetite Mining, which closed 5.14% above its IPO price.

It is worth noting that the IPO pricing appeared to have an effect on after market performance: the deal with the lowest pricing relative to the initial price range, Austnutria, performed the best. But a mid-point pricing didn't help some of the other high-profile deals that have been fighting for investor attention over the past few weeks. Metallurgical Corporation of China priced its $2.35 billion H-share offering at the mid-point, only to trade down 11.7% on the first day. The same is true of Peak Sport Products and Glorious Property, which fell 17% and 14.5% respectively in their debuts.