(Bloomberg) -- Ganfeng Lithium Co. slumped on its trading debut in Hong Kong as fresh turmoil in global markets added to weaker sentiment in the battery material sector.
The stock fell as much as 28 percent to HK$11.80 a share and traded at HK$12.38 as of 9:39am after being priced at HK$16.50, the lowest end of its offer range. Its Shenzhen-listed shares are down 46 percent this year.
Prices for lithium have declined this year amid concerns over the arrival of new supply and signs of weaker demand in China, falling about 8 percent in 2018, according to a Benchmark Mineral Intelligence index. Equity markets in Asia tumbled after the S&P 500 Index fell the most since February.
"Investors have decided to pause their investments around lithium and cobalt,” said Chris Berry, a New York-based analyst at House Mountain Partners LLC and consultant to companies in the sector. “Macro-economic concerns are driving the sentiment right now. With the threat of tariffs and trade war, there’s just a lot of uncertainty right now."”
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Lithium producers needed to be more conservative in the face of concerns about oversupply, Ganfeng’s Vice Chairman Wang Xiaoshen said in an interview on Oct. 9. He delivered a cautious message on growth and said it was time to “fasten seat belts” for lithium producers.
Ganfeng’s debut in Hong Kong is being watched together with another initial offering in New York to gauge investor sentiment on lithium. Livent Inc., a lithium spin-off from chemicals producer FMC Corp (NYSE:FMC)., is due to go public later Thursday. “The Ganfeng IPO is going to raise less money than we thought and Livent is probably going to struggle a little bit just like Ganfeng” Berry said.
To contact Bloomberg News staff for this story: Martin Ritchie in Shanghai at mritchie14@bloomberg.net
To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Keith Gosman, Jake Lloyd-Smith
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