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May 30, 2017

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Unorthodox IPOs gain traction in HK exchange

HONG KONG--Nightclubs with diamante toilets, luxury cemeteries and local restaurants have made a splash during their debuts on Hong Kong's stock exchange, proving particularly popular among "mom and pop" investors squeezed out of more mainstream openings.

Investing in unconventional companies can be something of a gamble. But recent soaring debuts in Hong Kong — known as initial public offerings (IPOs) — show significant enthusiasm among ordinary investors hoping to make a quick return on the stock exchange's less orthodox offerings, analysts say.

In a city where betting is strictly limited to the horses and some soccer matches, and where the average punter often loses out to institutional investors in the more mainstream IPOs, quirky debuts offer everyday investors an exciting, if somewhat risky, opportunity to dabble on the city's stock exchange.

"Hong Kong, mainland China even more, are in the sort of gambling mentality. There is always somebody willing to take your money if you are willing to give it to them," Doug Young, a Shanghai-based writer on capital markets and Chinese corporates, told AFP.

"People have an impression that the stock market is the place that you can get good return even though it's not always the truth. It is the mindset of a newer market," he added.

Hong Kong was the world's top IPO venue from 2009 to 2011, and while it has fallen away recently the New Year has started with a bang, especially for less orthodox companies.

Fu Shou Yuan, the largest mainland Chinese funeral services provider, saw its December US$215 million IPO oversubscribed by nearly 700 percent, while its shares have risen more than 40 percent since its debut to Friday's close of HK$4.8.

Cemeteries are big business in China, where the country's growing middle classes are increasingly willing to spend large amounts on plots of lands for their loved ones when they depart.

One cemetery managed by Fu Shou Yuan is located in a scenic Shanghai location and boasts original landscaping, artistic tombstones and a mixture of classical Chinese and modern architecture, according to the cemetery's website.

Champagne and Bling

At the less morbid end of Hong Kong's recent unorthodox IPO offerings is Magnum Entertainment, a nightclub operator that owns three venues in the city's famously raucous Lan Kwai Fong entertainment district.

On any given weekend night, the glitterati can be seen waiting in lines to access the kind of haunts where the bling flows as freely as the champagne. One Magnum club sports life-sized bronze bull statues on its outdoor terrace, while another is renowned for its diamante-encrusted washrooms.

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