Hong Kong, (Reuters) – Shares of China Literature, Tencent Holdings’ online publishing arm, closed more than 60 per cent above their IPO price in gray market trade ahead of what market watchers anticipate will be a blockbuster debut on Wednesday.
China Literature’s IPO raised US$1.1 billion after China’s biggest e-book company priced at the top of its marketed range of HK$48–HK$55, Tencent said in a statement on Tuesday.
Brokerages Phillip Securities and Bright Smart said the shares closed at HK$89.65 and HK$90.40, respectively, in gray market trade on Tuesday. That represents a jump of more than 60 per cent above its IPO price.
Both brokerages said the shares traded as high as HK$92.00, a climb of 67 per cent.
“Profit-taking interest at over HK$90 is expected to cap the upside while the valuation of the stock is also a bit too high,” said Stanley Chik, research director at Bright Smart Securities.
China Literature, which is 62 per cent owned by Tencent , has a business akin to Amazon.com Inc’s Kindle Store, operating a platform with 9.6 million literary works from 6.4 million authors.
