Core Mechanism - The primary pricing strategy for IPOs on the Hong Kong Stock Exchange (HKEX) is based on bookbuilding, which involves collecting demand from institutional and retail investors to form a demand curve and ultimately determine the issuance price [2][3]. Key Driving Factors - Market environment and investor sentiment, company fundamentals and valuation logic, and the balance between international placement and public offering are crucial in determining the pricing [3]. - The typical issuance structure consists of 70%-90% international placement and 10%-30% public offering, with both demand types influencing pricing [3]. - Initial pricing ranges are set based on comparable company analysis and adjusted dynamically based on demand collected during roadshows [4][5]. Pricing Range Setting and Adjustment - Investment banks establish an initial pricing range based on comparable company analysis, adjusting it according to real-time demand during the roadshow [4][5]. - The demand curve is updated continuously to reflect subscription volumes at different price levels [5]. Key Constraints Mechanism - The stabilization mechanism allows underwriters to buy shares within 30 days post-listing to maintain price stability, which can influence initial pricing [6]. - The allocation switch mechanism mandates a reallocation of shares from international placement to public offering in cases of oversubscription, increasing retail investor allocation [6]. Other Important Considerations - Balancing liquidity is essential; overly high pricing may lead to insufficient trading volume post-listing, affecting stock performance [7]. - Clarity in the valuation story is critical for investor confidence; companies must effectively communicate their growth logic to attract subscriptions [7]. - Regulatory requirements necessitate comprehensive disclosure of financial and business information to enable rational investor decision-making [8]. Summary of Pricing Strategy Logic - The pricing strategy follows a logical chain from market environment to company fundamentals, comparable valuations, initial range setting, demand collection, adjustments, and final pricing [8][9]. Case References - A recent AI company IPO saw strong institutional demand, leading to an initial range of 50-60 HKD, with final pricing at the upper limit of 60 HKD and a 120 times oversubscription [10][11]. - Conversely, a traditional manufacturing company faced cautious institutional bids, resulting in a final pricing at the lower limit of 8 HKD with a 5 times oversubscription [10][11].