Investors worries include SoftBank Corp’s exposure to Huawei. SoftBank has stated it plans on replacing its Huawei-provided 4G network equipment with those of other suppliers – an expensive and time-consuming affair.
In a rare development, shares of Japan’s SoftBank Corp fell by more than 10% on debut as investor appetite for what has been Japan’s biggest ever IPO shrunk from worries over its exposure to Chinese telecoms equipment manufacturer Huawei.
Of eighty two IPOs that have been floated in Japan so far this year, SoftBank’s issue was the seventh to open below its IPO price.
“Retail investors are dumping shares after seeing the opening below IPO price, also affected by a service outage,” said a market analyst at a brokerage firm on the condition of anonymity since he was not authorized to speak to the media. “But I don’t expect the shares will fall much further given their dividend yield and expectations for being included in stock indexes”.
Following its $23.5 billion IPO, its shares fell by 10.4% of its IPO price of 1,500 yen to 1,344 yen against the broader Tokyo market which rose by 0.1%.
SoftBank Corp’s shares were very heavily traded on the Tokyo Stock Exchange’s first section and accounted for around a third of its total turnover volume.
Eo f the reasons for its lacklustre performance was investor worries of SoftBank Corp’s relation with China’s Huawei Technologies Co Ltd.
Huawei has come under government scrutiny around the globe for its ties with the Chinese government and the possibility that its equipment could be used to facilitate intelligence gathering by Beijing.
SoftBank Corp has stated, it plans on replacing its Huawei-provided 4G network equipment with those of other suppliers. This is likely to be an expensive and time-consuming affair.
Incidentally, IPOs are popular among Japanese retail investors, many of whom see them as sure profit bets given their tendency to open much higher than offering prices.