Zhipu AI, MiniMax shares for Hong Kong investors as lock-ups end

Hong Kong’s stock market could face sell-off pressure amid a torrent of new share supply in coming days as the six-month lock-up period ends for hot artificial intelligence and semiconductor picks including Zhipu AI and MiniMax. Meanwhile analysts warned of rising fears of a drain on liquidity as many of the same companies were eyeing large secondary share placements. The market was facing dual selling pressure, said Stevan Tam, associate director at Fulbright Financial. “These stocks have generally seen significant gains, and it is believed that investors may be looking to lock in some profits, which could limit their upwards momentum,” he said. “At the same time, large-scale placements could intensify selling pressure.” The lock-up periods for AI model developers Zhipu, which is known as Z.ai internationally and trades as Knowledge Atlas Technology, and MiniMax end on Tuesday and Wednesday, respectively, with 25.68 million and 150 million shares becoming tradeable, out of total issued shares of 446 million and 314 million, respectively. Zhipu gained 5 per cent on Tuesday morning after sliding 14.6 per cent on Monday, while MiniMax lost 2.3 per cent on Tuesday morning after a 3.3 per cent drop on Monday. Based on Tuesday’s mid-day prices, the combined market value of the shares subject to the lock-up expiration amounts to HK$90 billion (US$11.5 billion). Goldman Sachs previously estimated that shares worth US$274 billion would be released on the Hong Kong market over the next 12 months as lock-up periods ended, a record high. Based on historical experience, the share prices of such stocks typically decline by 4 to 7 per cent within three to six months after the lock-up period ends. Expiry not only opens the door for early investors to trim stakes but, more critically, presents a window for the companies themselves to raise capital by issuing new shares.

“While it is rare to see companies launch share placements so shortly after their market debuts in traditional industries, it is becoming increasingly commonplace among hot tech listings,” Tam said. AI, semiconductor and pharmaceutical companies typically listed without turning a profit, yet their research required large, ongoing capital expenditure, so amid elevated share prices, management teams were seizing the window to raise funds, Tam added. Shares in Zhipu, which listed in early January, surged more than 12-fold from its IPO price, despite a 48 per cent pullback from the historical high of HK$2,980. “When a company issues new shares while its stock price is at a high, market acceptance is typically higher,” Tam said. “However, if the stock price is already trending downward, or if the company issues new shares multiple times in a short period, the market often interprets this as a sign of cash flow strain.”