Changpeng Wan
On September 9, 2025, Dahon Kogo (02543.HK), hailed as mainland China’s leading folding bicycle manufacturer, made its highly anticipated debut on the Hong Kong Stock Exchange. The stock opened at HK$67.5 per share, marking a 36.36% premium to its IPO price of HK$49.5. It briefly climbed to HK$69 during the session—a nearly 40% gain—before closing at HK$56.9, up 14.95% for the day. However, this listed performance paled in comparison to its gray market frenzy, where the stock skyrocketed by over 200%, making it one of the year’s most talked-about IPOs. This divergence between gray market euphoria and main board reality offers critical insights into market sentiment, liquidity dynamics, and retail investor behavior.
What Is Gray Market Trading and Why Does It Matter?
Gray market trading, also known as gray market or pre-IPO trading, allows investors to trade shares before they officially list on an exchange. This market is often seen as a barometer of retail sentiment and demand ahead of the public debut.
How Gray Market Trading Works
In Hong Kong, gray market trading typically occurs through brokerage platforms like Futu and Tiger Brokers. Investors can place bids and offers based on their anticipation of the IPO’s first-day performance. These trades are settled in cash after the official listing, based on the difference between the gray market price and the actual opening price.
Dahon Kogo’s Gray Market Frenzy
Dahon Kogo’s gray market activity was nothing short of spectacular. On Futu’s platform, the stock opened at HK$120—a 143% surge from the IPO price—and peaked at HK$150, representing a 203% gain. This meant that investors who secured an allocation and sold in the gray market could pocket up to HK$10,050 per lot. Such exuberance is rare, even in a market known for IPO speculation.
Record-Breaking Oversubscription: The Making of a King
Dahon Kogo’s public offering received approximately 223,900 valid applications, resulting in a staggering 7,558.4x oversubscription rate. This shattered the previous record of 6,289x set by Maoji Kuichong in 2018, cementing Dahon Kogo’s status as Hong Kong’s new oversubscription king.
Why Was Demand So High?
Several factors contributed to this unprecedented demand:
– Small float: The company issued only 7.92 million shares, raising HK$392 million. Smaller IPOs often attract speculative interest due to the potential for sharp price movements.
– Market sentiment: Hong Kong’s IPO market has shown signs of revival in 2025, with investors eager for new opportunities.
– Strong cornerstone investors: Institutions like Allianz Global Investors Asia Pacific, Greater Bay Area Homeland Investments, Harvest, and Veken Elite subscribed to 25.43% of the offering, boosting confidence.
The Odds of Winning an Allocation
With oversubscription levels this high, the retail lottery became extremely competitive. The one-lot winning ratio was just 0.02%, making it one of the hardest HK IPOs to secure in recent history.
Dahon Kogo: China’s Folding Bicycle Leader
Beyond the IPO frenzy, Dahon Kogo has a compelling business narrative. It is the largest folding bicycle company in mainland China by both retail sales volume and value in 2024.
The Global Folding Bike Market
According to Frost & Sullivan, the global folding bicycle market has grown from 2 million units in 2019 to 3.7 million in 2024, a compound annual growth rate (CAGR) of 13.4%. The market is projected to reach 5.2 million units by 2029, with a CAGR of 7.3%.
Key growth drivers include:
– Urbanization: Compact, portable bikes are ideal for city dwellers with limited storage space.
– Technological advancements: Lighter materials, improved folding mechanisms, and enhanced durability.
– Rising average selling prices: Global market value grew from RMB9 billion in 2019 to RMB23.1 billion in 2024, a CAGR of 20.8%.
Dahon Kogo’s Financial Performance
The company’s revenue increased from RMB254 million in 2022 to RMB300 million in 2023, and further to RMB451 million in 2024—a CAGR of 33.1%. In 2024, it sold 226,400 units, capturing a 6.2% global market share.
Why the Disconnect Between Gray Market and Listing Day?
The dramatic difference between Dahon Kogo’s gray market performance and its actual debut highlights several market dynamics.
Speculative Momentum vs. Fundamental Valuation
Gray market trading is driven largely by sentiment and speculation, often detached from fundamental valuations. The extreme oversubscription created a feedback loop of excitement, pushing gray market prices to unsustainable levels.
Profit-Taking Pressure
Many investors who secured allocations at the IPO price chose to cash in their gains immediately after listing, creating selling pressure that capped the upside.
Market Realities
While Dahon Kogo is a leader in a growing niche, its valuation—post-gray market surge—may have outpaced near-term growth prospects. Investors likely reassessed the risk-reward balance once trading went live.
Lessons for IPO Investors
Dahon Kogo’s IPO offers valuable takeaways for both retail and institutional investors.
Manage Expectations
Gray market premiums are not always indicative of listed performance. Investors should avoid FOMO (fear of missing out) and conduct independent due diligence.
Understand the Risks of High Oversubscription
Extremely high oversubscription rates often lead to low allocation sizes and amplified volatility. Diversifying across multiple IPOs can mitigate concentration risk.
Long-Term Vision vs. Short-Term Gains
While flipping IPOs can be profitable, sustainable returns come from identifying companies with strong fundamentals and holding for the long term.
The Future of Dahon Kogo and the Folding Bike Industry
Dahon Kogo is well-positioned to benefit from structural trends like urbanization, sustainability, and health consciousness. However, execution will be key.
Growth Strategies
The company plans to expand its product lineup, enhance its distribution network, and explore international markets. Innovations in e-bikes and smart features could also drive future growth.
Competitive Landscape
The folding bicycle market is becoming increasingly competitive. Dahon Kogo will need to differentiate through design, quality, and brand loyalty to maintain its leadership.
Investment Outlook
While the IPO attracted speculative interest, long-term investors should focus on the company’s ability to execute its growth strategy and deliver consistent financial performance.
Dahon Kogo’s journey from record-breaking oversubscription to a modest listing gain underscores the complexities of IPO investing. While gray market activity can signal strong demand, it is not a guarantee of post-listing performance. Investors should prioritize fundamental analysis over speculative momentum. For those considering IPO investments, diversify your portfolio, set realistic expectations, and focus on long-term value rather than short-term fluctuations. Stay informed with reliable sources and consult financial advisors to navigate the exciting yet volatile world of IPOs.
