(Bloomberg) -- Retail investors have applied to borrow more than $60 billion to participate in Chinese toymaker Bloks Group Ltd.’s Hong Kong initial public offering, continuing to show demand for new listings.

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Individual investors have sought to borrow money through margin financing, with the amount reflecting more than 3,200 times the number of shares reserved for them at the upper end of the IPO’s price range, according to TradeGo data displayed on the Futubull trading application. They applied to borrow HK$473.6 billion ($60.9 billion) through brokerages to bid for the Shanghai-based company’s shares as of 4:30 p.m. Hong Kong time.

Bloks, which makes assembly-character toys, has been taking investor orders since Tuesday and is set to list shares on Jan. 10. It is offering 24.1 million shares to raise as much as HK$1.5 billion, with local retail investors being allocated 10% of the shares. The debut also comes against the backdrop of a rally in fellow toymaker Pop Mart International Group Ltd.

Dealmakers are broadly expecting a better year for Hong Kong IPOs. Some listings attracted significant interest from individual investors last year, with high subscription multiples being concentrated among smaller deals.

Chinese courier SF Holding Co.’s $749 million listing saw about 79 times subscription for its retail tranche, while the same allotment for health-supplement company Herbs Generation Group Holdings Ltd.’s $16 million IPO drew more than 6,000 times subscription. Both companies triggered the so-called clawback mechanism, which increased the allocation to retail investors.

The jump in retail activity comes as an increasing number of brokerage firms have been offering margin loans at a low or even zero interest rate, said Andy Wong, IPO leader at Shinewing (HK) CPA Ltd., an accounting and advisory firm.

“This shall create a continued boiling atmosphere for the Hong Kong IPO market,” Wong said. But that also means lower chances of securing shares in the IPO, and the issuer’s shares might face pressure after their listing, he added.

Hong Kong’s stock exchange in 2023 switched its IPO settlement platform to shorten the time between the pricing of a deal and the debut from five business days to two. The shorter settlement date allows brokerages to offer higher leverage with no margin interest rate, said Arnold Tam, chief analyst at Futu Securities.

Story Continues

Hong Kong Exchanges and Clearing Ltd. is seeking to change some requirements for IPOs through a market consultation, which touches on the clawback mechanism. Mom-and-pop investors can currently be allocated as much as 50% of a deal when the subscription ratio is above a certain level, and the exchange is proposing to lower that to 20% if issuers initially reserve 5% of the shares for the public.

The mechanism has long been a bane for Hong Kong’s investment bankers, who argue that it leaves them with little stock to allocate to funds when IPOs are in high demand.

Bloks generates more than half of its revenue from sales of products based on intellectual property from Ultraman, according to its listing document. The company posted about 1 billion yuan ($143 million) in revenue and a loss of 254.9 million yuan for the first six months of 2024.

(Updates margin-loan application figures, adds analyst comment in eighth paragraph. An earlier version of the story was corrected to reflect retail investors have applied to borrow more than $50 billion to take part in the Bloks IPO.)

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