Forgame shares jump 32.35 per cent on Hong Kong debut

Shares of Forgame, the mainland's largest developer of web games, soared by more than a third in their Hong Kong trading debut yesterday, underscoring investor optimism for technology companies that have fuelled rallies on the Nasdaq this year.

Forgame's offer generated strong interest from small investors and was priced near the top of a marketing range, raising about US$206 million. Investors who missed out on the shares chased the stock yesterday, sending its value up as much as 36.5 per cent, compared with a 0.8 per cent rise in the market's technology sub-index. They closed at HK$67.50, up 32.35 per cent.

The debut comes on the heels of a 25 per cent rally in the technology-heavy Nasdaq Composite Index this year and an even stronger gain in Hong Kong-listed technology stocks. Chinese technology stocks are particularly in favour because of the growth outlook for the country's internet companies, traders said.

"People are over-optimistic on this sector," said Alvin Cheung, associate director at Prudential Brokerage. "Their thinking and prediction is heavily dependent on the market. When the market is OK, they have an automatic positive opinion on the stock, but they can change their minds very, very quickly."

The stock opened at HK$61.75 and traded as high as HK$69.60, compared with the initial public offering price of HK$51. The technology sub-index of Hong Kong-listed companies has surged 51 per cent so far this year, compared with a 2.4 per cent gain in the benchmark Hang Seng Index.

Forgame's offer has been swamped by orders from small investors, with the retail portion generating demand more than 300 times the shares on offer, a company filing said on Wednesday. The institutional tranche of the initial public offering was "very significantly oversubscribed", it said.