HONG KONG: Hong Kong demand for new share sales has hit fever pitch, with 417,000 people applying for lots in Tencent Holdings Ltd.’s online bookstore unit -- more than 5% of the city’s population.
China Literature Ltd.’s retail offering was 625 times oversubscribed, according to the company. That locked up at least HK$520bil (US$67bil), or a third of the city’s monetary base, the South China Morning Post reported. It’s easy to see why the clamor: China Literature’s shares surged as much as 100% on their Wednesday debut.
Interest in initial public offerings is so intense it’s affecting the city’s interbank rates. The overnight Hibor fixing jumped 2.1% points on Oct. 31, the most in a decade, as investors placed orders for China Literature.
“You can tell Hong Kong investors like tech stocks,” said Daniel So, Hong Kong-based strategist with CMB International Securities Ltd. “If you’d managed to get the stock, you’d have made a lot of money.”
China Literature’s IPO follows ZhongAn Online P&C Insurance Co., which went public in September. The first major fintech listing in Hong Kong, and backed by Ant Financial, the owner of Alipay, the retail portion was almost 400 times oversubscribed.
Focus will now shift to Razer Inc., a manufacturer of high-spec gaming accessories, which will begin trading in Hong Kong on Monday after raising US$529mil.
Hong Kong has gone through periods of IPO fever before, notably in 2006-2007 before the onset of global financial crisis and in 2000 before the dotcom bubble burst. The Hang Seng Index has rallied 32% this year to a decade-high.
China Literature is the mainland’s biggest publisher of e-books, offering a similar business model to Amazon.com Inc.’s Kindle Store. - Bloomberg
Limited time offer:
Just RM5 per month.
