Successful chapter for China Literature
Offering should also encourage the Hong Kong stock market to tap into a growing trend and attract more mainland tech companies to list in the city
The stellar debut of the China Literature initial public offering on the Hong Kong stock exchange may have dazzled observers, but when vision clears it will be seen as a landmark in the mainland’s economic transition. It is the most dramatic market signal yet that China is shifting focus and emphasis to growth driven by the so-called new economy. Nine or 10 years ago, in the heady days before the global financial crisis, it seemed scarcely believable that an online publishing and e-book website would one day outshine the traditional flag-bearers of the mainland’s economic rise.
Investors then subscribed en masse to companies raising capital in the energy and manufacturing sectors. Unless their principals and sponsors had badly misjudged market sentiment, these IPOs were virtually assured of oversubscription and soaring value on debut. These days, however, China Literature is in another league, carrying investors’ hopes that it will become the equivalent of Amazon or Alibaba.
China Lit – we may as well get used to the abbreviation – priced its IPO at the top end of the range as investors oversubscribed by more than 600 times, locking in more than HK$520 billion of capital, the highest since China Railway Construction’s HK$535 billion in 2008.
With an archive of nearly 10 million titles produced by more than six million authors in a business model similar to Amazon’s Kindle Store, China Lit is more like an e-commerce and internet company with a cultural focus, the kind of enterprise that has become an increasingly important growth engine. That is good for China’s balanced development. Hopefully, the money raised will be used wisely to grow the business. It is good to hear Wu Wenhui, co-chief executive officer of China Literature, talk of bringing Chinese original content to a Hong Kong and global audience, and of plans to develop film, television, and other entertainment products “based on the IP we own, and also expand the genres of e-books”.
The success of the IPO should also encourage the Hong Kong stock market to tap into a growing trend and attract more mainland tech companies to list here.