China’s answer to Kindle soars on Hong Kong market debut

China Literature Co-Chief Executive Officers Liang Xiaodong (left) and Wu Wenhui pose during a news conference on the company's IPO in Hong Kong October 25, 2017. — Reuters pic
China Literature Co-Chief Executive Officers Liang Xiaodong (left) and Wu Wenhui pose during a news conference on the company's IPO in Hong Kong October 25, 2017. — Reuters pic

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HONG KONG, Nov 8 ― Shares in Chinese internet giant Tencent’s e-book arm, China Literature, almost doubled in value in its debut on the Hong Kong stock exchange today.

Shares in China Literature, the country’s biggest online publishing business and Tencent’s answer to Amazon’s Kindle Store, opened at HK$90, which is 63.6 per cent more than its HK$55 IPO price, and shot to a high of HK$109.8, before closing at HK$102.4.

The company calls itself a “pioneer” of China’s online literature market, carrying 6.4 million writers and 9.6 million literary works.

Analyst Dickie Wong told AFP that investors saw a lot of potential in China Literature and its prospects for growth. 

“I do see some of the authors, they can be very famous and some of their stories can become movies or soap operas and online games and cellphone games,” said Wong, the executive director of research at Kingston Securities.

Tencent owns 62 per cent of the firm, formerly known as China Reading, which was created through a merger between the internet giant’s online literature arm and another Chinese online publisher Shanda Cloudary.

Castor Pang, head of research at Core Pacific Yamaichi securities firm, said the share price surge was “well beyond” his expectations, adding that there was high demand for internet companies.

The Shanghai-based firm is the fifth-largest IPO in Hong Kong this year, according to Bloomberg News, as the Asian financial hub is increasingly becoming a destination for tech companies.

Echoing Pang’s view, Jackson Wong of Huarong International Securities, said investors were also buying into the Tencent brand.

“The concept that this kind of company will be the leader or changing people’s lives, I think this is creating a kind of hype,” he said, drawing parallels between Tencent’s rise and Amazon’s success.

Amazon founder Jeff Bezos is currently the world’s richest man worth US$95.1 billion (RM401.9 billion), overtaking Bill Gates, worth US$88.5 billion, according to Bloomberg News’ Billionaire Index.

Popular selfie app developer Meitu debuted on the Hong Kong stock exchange in December after raising US$629 million in the largest IPO by a tech company in the city in almost a decade.

Meitu targets teenagers and young adults who use the beautifying app to retouch selfie photos.

“I do think that in the future there would be more and more internet related companies listed in Hong Kong because they can see this time, especially with China Literature, they did quite well,” analyst Dickie Wong said.

Video game accessories maker Razer is also looking to list in Hong Kong and is expected to raise at least US$400 million. ― AFP

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