BEIJING, December 8 (TMTPOST)— Despite the big rally that Chinese shares listed in the United States made recently, China’s Twitter-like social media Weibo failed to break to spell of trading below the offering price in the Hong Kong debut this year.

Source: Weibo

With the listing price of HK$272.80, Weibo raised about HK$1.38 billion (US$385 million) and listed on the Hong Kong Stock Exchange under the code "9898" on Wednesday. The shares opened 5.9% lower at HK$256.20 and settled 7.2% below their list price, while Hong Kong's stock market benchmark Hang Seng Index and the Tech Index that day closed 0.06% and 0.03% higher respectively and Weibo’s U.S.-listed shares jumped more than 4% a day earlier.

Weibo’s underperformance was unsurprising since its shares traded in the gray market, which allows investors to bid for new shares ahead of official listing on the exchange, closed more than 5% below the issue price on Tuesday. However, as the first homecoming shares of a Chinese firm that listed in the U.S. since Didi last week announced to delist from New York and prepare listing in Hong Kong, Weibo’s fall was not a good omen.

Like Weibo, there were six IPO stocks which fell below list price in their Hong Kong debut or in the gray market trading a day prior to the listing in November alone, the China Securities Journal reported. Such poor first-day performance of new shares mainly resulted from uncertainties of the global COVID-19 pandemic development and the economic recovery outlook as well as some of issuers’ mediocre financial results that made investors cautious and chose to watch and see, the national financial newspaper cited experts’ views. Nearly 90% of Weibo’s revenue last year came from advertising and marketing, underlining the lack of diversified revenue streams, and the active monthly users (MAUs) had peaked to over 570 million in the third quarter, so if Weibo doesn’t improve the revenue diversification and the user stickiness, it’s hard to turn attractive to investors in the long run, Zhongtai International Securities analyst Zhao Hongmei noted.