INSTITUTIONAL investors are buying Kuaishou Technology’s Hong Kong shares before its Friday debut at a significant premium to the listing price, underscoring the high level of demand for the firm’s initial public offering (IPO).

Some trades were executed for HK$250 (US$32.5) apiece in gray-market trading Monday, according to people familiar with the matter. That’s more than double the listing price of HK$115 and a bigger premium than the 50 percent jump on Ant Group Co.’s planned Hong Kong offering before it was scrapped.

If Kuaishou’s shares rise as much Friday, it would be the third-best debut for an IPO over US$1 billion in Hong Kong on record.

“The scale of the premium is quite extraordinary given that it reflects institutional buying and one assumes a more analytical perspective on value than you typically see from retail traders,” said Gary Dugan, CEO of the Global CIO Office. “The fear was that institutional investors would back off from the market given the recent volatility. The support in the market for new issues bodes well for further gains in Asian markets.”

In a gray market, investors can bid for new shares before they officially start trading on a stock exchange. The over-the-counter mechanism is often seen as an early indicator of investor demand for an IPO’s debut. Retail buyers will be able to trade through a similar channel a day before Kuaishou begins trading Friday. (SD-Agencies)