Recently, a number of Hong Kong-listed IPO companies issued a notice that the stable price period is over and the over-allotment rights have not been exercised during the stable period.

As stated in the Huafang Group (03611) notice, the price stabilization period ended on January 4, 2023 (that is, the 30th day after the deadline for submitting applications for Hong Kong public offering). As there was no over-allotment of shares under the International offer, the Joint Global Coordinator and the overall Coordinator (both for itself and on behalf of the international underwriter) did not exercise the over-allotment option, and the stabilizing price manager, its associates or any person acting on its behalf did not carry out the price stabilization action described in the prospectus in respect of the global offering during the price stabilization period.

Transportation Gas (01407) also announced recently that there was no over-allocation in the international offering during the price stabilization period, nor did the price stabilization operator, its affiliates or anyone acting on its behalf take price stabilization action on the global offering during the price stabilization period.

Sunshine Insurance (06963) also announced that the stable price period for the global sale ended on January 4. The overall coordinator (for himself and on behalf of the international underwriter) did not exercise the over-allotment option during the price stabilization period, so no H shares were issued or will be issued under the over-allotment option.

According to investment bankers, an over-allotment option is an option granted by the issuer to the lead underwriter, who oversells shares of no more than 15% of the underwritten amount at the same issue price. Furthermore, within 30 days from the date of listing of the additional underwriting shares, the lead underwriter has the right to choose to buy issuer shares from the centralized bidding market according to market conditions, or to require issuers to issue additional shares. it is allocated to investors who apply for this over-sale part, which is also known as the "green shoes" mechanism.

Industry insiders said that "green shoes" is a mechanism adopted by most Hong Kong stock IPO enterprises and an important product of the development of the capital market. It is an important achievement of the improvement of the capital market by flexibly adjusting the issuance volume and responding to market fluctuations so as to reduce its impact and make the company's issuance and listing more stable and controllable.

Prior to this, the Hong Kong stock market was still volatile and the overall market was lower, so a number of companies listed in Hong Kong chose to buy issuer shares from the centralized bidding market rather than over-allotment. In the view of industry analysts, this is good for the company to stabilize its stock price, and it can protect investors from reducing investment income due to the fluctuations in the initial stage of IPO, reflecting the great importance that issuers attach to investor protection.

At present, Hong Kong stocks are collectively picking up, and industry insiders believe that with the continued repair of valuations and the further replenishment of IPO corporate capital, high-quality listed companies are expected to take advantage of the opportunity to release more value in the capital market, be recognized by investors and start a new growth cycle.