CATL’s stellar run and record premium come up against doubling of stock supply
The availability of 76 million CATL shares in Hong Kong following the expiry of a six-month lock-up period could impede the gains
The spectacular gain in Contemporary Amperex Technology (CATL) shares since its Hong Kong listing faces a reality check this week: a twofold increase in its free-float shares will test investors’ risk appetite.
Some 76 million shares of the Ningde, Fujian province-based company will be available for trading on the city’s exchange from Thursday following the expiry of a six-month lock-up period. The shares, which are held by cornerstone investors like Kuwait Investment Authority and UBS Asset Management, account for almost half of CATL’s HK$41 billion (US$5.3 billion) offering, the biggest in Hong Kong this year.
Global investors have been chasing CATL’s Hong Kong shares amid a revival in the city’s initial public offering (IPO) market and on prospects of rising demand for the company’s lithium batteries that power electric vehicles (EVs) and energy-storage equipment. CATL is the world’s biggest manufacturer of EV batteries, supplying the likes of Tesla, Xiaomi and Volkswagen.
JPMorgan said the expiry of the lock-up period would serve as a catalyst for narrowing the discrepancy between CATL’s stocks trading in Hong Kong and Shenzhen. Demand for the Hong Kong-traded shares may wane because of valuation concerns and their outperformance since the start of trading, according to the US bank.