China bubble tea chain plunges in Hong Kong debut

Chabaidao means 100 varieties of tea

Shares in Chinese bubble tea chain Sichuan Baicha Baidao, which is also known as Chabaidao, have fallen by more than 26% in their first day of trading on the Hong Kong Stock Exchange.

Chabaidao's market debut was the Asian financial hub's largest initial public offering (IPO) so far this year.

The poor performance underscores the difficulties the city is facing in attracting investment.

Chabaidao, which means 100 varieties of tea, is China’s third-biggest fresh tea drinks chain by retail sales.

The Chengdu-based company raised about $330m (£267m) in the IPO even as the offering was met with tepid interest from investors.

The firm said it plans to use about half the money to upgrade its operations and strengthen its supply chain.

Rival bubble tea firms Mixue, Guming and Auntea Jenny have also said they are planning to sell shares in Hong Kong.

However, Chabaidao's weak debut highlights the challenges faced by authorities as they attempt to revive confidence in the city's stock market.

Investors are concerned about Hong Kong's recovery from the pandemic and its national security legislation as well as slowing economic growth in China.

Last year, the amount of money raised by IPOs in Hong Kong slumped to the lowest level in two decades.

The city's benchmark Hang Seng share index has lost over 16% of its value in the last year.

Last week, China’s securities regulator said it will support share offerings in Hong Kong.

The watchdog also plans to relax regulations rules on stock trading links between the city and the mainland as it tries to boost Hong Kong's position as an international financial hub.