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Chinese food delivery company Meituan-Dianping started its first day of trading on a positive note in Hong Kong on Thursday, signaling upbeat investor sentiment toward China’s tech industry.

During morning trading, Meituan’s shares climbed as high as HK$73.85 ($9.41), which was 7 percent higher than its initial public offering (IPO) price of HK$69 per share.

Meituan co-founder and chief executive Wang Xing commended the company’s nearly 600,000 delivery persons and 50,000 employees in driving growth.    

The strong debut of the Beijing-based firm came in contrast with other recent listing from the country’s tech sector, which has been marred by weak markets and lower demand for IPOs.

The listing valued the group at around $55 billion, making Meituan, which is backed by Chinese gaming and social media giant Tencent Holdings Ltd., as one of the most valuable tech companies in the world’s second largest economy.

Joint sponsors for Meituan’s IPO included US financial groups, Bank of America Merrill Lynch, Goldman Sachs Group Inc., and Morgan Stanley.

A Positive Sign for Hong Kong IPOs

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Meituan’s stock performance is viewed as a test of investor appetite for Hong Kong listings against a backdrop of falling share prices and previous multi-billion dollar IPOs that failed to stay above their issue price, like smartphone maker Xiaomi Corp. and telecoms tower operator China Tower Corp. Ltd.

Real estate development company Zhenro Properties Group Ltd. is the only firm trading above its issue price out of the ten listings in Hong Kong in 2018.

When Meituan reportedly established a target valuation of $55 billion for its Hong Kong IPO, it raised questions about whether that figure is beyond the group’s capabilities, despite Meituan’s market leadership in China.

The company set an IPO price range of HK$60 to HK$72, receiving huge support from institutional investors.

Meituan’s positive start also reinforces investors’ optimism over the company being able to defend itself against intense competition from online food-delivery company Ele.me, which is backed by e-commerce giant Alibaba Group Holding Ltd.

Vying for market share, both Meituan and Ele.me have been offering huge discounts to attract new customers.

This year is expected to be the biggest year for IPOs in Hong Kong since 2015, partially due to the market’s consecutive gains late last year and policies instituted this 2018 to draw tech firms by permitting them to provide weighted voting rights to their founders.

Meituan is the second company with dual-class share structure to go public and the second multi-billion dollar tech float in Hong Kong in 2018, following Xiaomi’s debut in July.

So far this year, listings in Hong Kong have raised a total of $28.7 billion, compared to $33.8 billion raised three years earlier.

However, the possibility for other companies to go public have turned dim as investors become more vigilant due to the benchmark Hang Seng index shedding 18 percent from its January peak and as China and the US falls further into a trade war.

The broader Hang Seng index closed up with a 0.2 percent gain to HK$27,477.67 on Thursday.

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