FIBOCOM (00638), which debuted on the Hong Kong Stock Exchange on October 22, 2025, broke the 16-day streak of Hong Kong IPOs closing higher on their first trading day with an 11.72% drop. In less than two months, its stock price has gone through multiple cycles of breaking issue price, stabilization, catch-up declines, rallies, and pullbacks. However, behind these fluctuations, a key signal stands out: Southbound funds have rapidly increased their stake in FIBOCOM to 8.3% as of December 8, indicating growing bullish momentum. While the market digests short-term volatility, the steady accumulation by Southbound funds hints at future upside—FIBOCOM’s Hong Kong story may be approaching a turning point.

**Dark Pool Decline Triggers Panic** FIBOCOM’s first-day drop was foreshadowed in the dark pool session. On October 21, its stock opened high but closed slightly below the issue price, down 0.93%. This was concerning because FIBOCOM adopted "Mechanism B" for its IPO—a popular choice since Hong Kong’s new listing rules took effect on August 4, 2025. Under this mechanism, retail investors receive fewer shares, reducing selling pressure post-listing.

From August 4 to FIBOCOM’s debut, 24 mainboard IPOs adopted Mechanism B, with only FIBOCOM and AUX Electric breaking issue price. Most others saw strong gains, with 14 rising over 30% and 10 doubling on their first day. FIBOCOM’s underperformance was attributed to its A+H dual listing (anchored by its A-share valuation) and panic selling triggered by the dark pool decline. On its debut, turnover hit 41.29%, with over 40% of investors selling, totaling HKD 307 million. The next day, the stock fell another 6.95%, but turnover dropped to 9.99%, signaling easing panic.

**Underwriter Support and Catch-Up Decline** After two days of steep losses, FIBOCOM entered a stabilization phase. Lead underwriter CLSA stepped in to repurchase shares, driving a 10.25% rebound on the third day. Over the next 13 sessions, CLSA’s support kept the stock range-bound, peaking at HKD 20.66 (close to the HKD 21.5 issue price).

However, once the stabilization period ended on November 16, FIBOCOM entered a "catch-up decline" phase. While CLSA had bought 20.26 million shares (15% of the offering) at HKD 17.3–21.5, FIBOCOM’s A-shares had fallen nearly 12% during this period. The H-shares then plunged 30% in seven sessions.

**Recovery and AI Catalyst** After bottoming on November 25, FIBOCOM rebounded alongside its A-shares. On December 1, news that ByteDance and ZTE (000063.SZ) launched an AI phone (using FIBOCOM’s wireless modules) sparked a 20% surge in A-shares and a 14.55% jump in H-shares. However, profit-taking after a 33% rally in four sessions led to a pullback.

**Southbound Funds: The Hidden Force** Since being added to the Stock Connect on November 17, Southbound funds have aggressively bought FIBOCOM H-shares, raising their stake to 9.2% by December 4. Even after some profit-taking, they held 8.38% (HKD 194 million) as of December 9. Notably, their buying accelerated during the steepest declines, suggesting they saw value in the dip. With H-shares still trading at a 41.9% discount to A-shares, Southbound accumulation may signal an impending upturn.

As Southbound funds amass shares at low prices, FIBOCOM’s next rally could be closer than the market expects.