The global frenzy for technology stocks sent shares of China Literature Ltd. surging on their first day of trading in Hong Kong.
China Literature's shares started trading above 90 Hong Kong dollars (US$11.53), compared with the offer price of HK$55, and quickly approached HK$105--a 91% gain. That gave the company a market value of about HK$95 billion (US$12.2 billion).
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The broader Hong Kong stock market rose slightly in early trading, with the Hang Seng Index up 0.1%.
The Tencent Holdings Ltd. unit operates an online library and makes money when its users pay to access books. About 6% of its nearly 200 million monthly active users paid to read in the first half of the year, and a majority of those users came through mobile.
There was strong interest in the offering, with investor orders for the retail side reaching about 625 times the amount of stock available. China Literature raised about US$1.1 billion through the IPO.
Investors and analysts attributed the appetite for China Literature's IPO to the global interest in technology and internet stocks, which have surged around the world, propelling indexes to multiyear highs in Asia and records in the U.S.
China Literature's connection with WeChat-maker Tencent also added to the offering's popularity. Share of Tencent--a major component of Asian benchmarks like the Hang Seng and MSCI AC Asia Pacific ex-Japan index--have risen 104% this year.
"Companies like Tencent are seen as unstoppable," said Joshua Crabb, head of Asian equities at Old Mutual Global Investors. Tencent shares, which have logged five straight record closing highs, fell 0.6% in early trading Wednesday.
ZhongAn Online P&C Insurance Co., China's first online-only insurer that also benefited from the wave of interest in tech stocks, notched a first-day stock gain of 9.2% in September.
It has been a hot year for shares of new companies in Asia. Shares of newly public companies in the Asia-Pacific region, on average, have risen by 141% from their IPO prices so far this year through the end of October, according to Dealogic. That compares with an average 25% gain for U.S. IPOs and a 13% increase for new issues in Europe this year.
Steven Russolillo contributed to this article.
Write to Saumya Vaishampayan at email@example.com
(END) Dow Jones Newswires
November 07, 2017 21:52 ET (02:52 GMT)