HONG KONG (Reuters Breakingviews) - Tech fervour is buoying Hong Kong’s new-issue market. Investors have snapped up shares in Razer, a maker of keyboards and mice for gamers, and China Literature, the electronic publishing arm of locally listed heavyweight Tencent. That contrasts with signs of fatigue over initial public offerings in New York and London. Limited supply, particularly in tech, has helped keep the market healthy.
On Tuesday, Razer priced its $545 million IPO close to the top of the range, IFR reported, after drawing strong demand. Shares of China Literature, which raised $1.1 billion last week, are set to debut on Wednesday. Retail investors placed orders worth a staggering 620 times the number of shares on offer, according to someone familiar with the deal.
This is despite flagging sentiment elsewhere. Last week, shares in the doll-maker Funko cratered some 40 percent in New York - the worst first-day showing in 17 years. And two British outfits shelved planned London listings, following other disappointing debuts.
A shortage of deals helps. As of Nov. 2, world IPO volumes are up 29 percent this year at $143 billion, Thomson Reuters data shows, while volumes in the United States have rocketed 103 percent. But new listings in Hong Kong have totalled just $8.4 billion this year. That is less than half of last year’s amount, which was boosted by the $7.6 billion listing of Postal Savings Bank of China. And with a global technology rally in full swing, investors are hungry for stocks that tap into exciting trends, like a global gaming market or China’s smartphone-wielding consumers.
A wave of companies like Razer and China Literature will help make the local market more dynamic. The $459 billion Tencent aside, Hong Kong is dominated by traditional financial and property groups, and stodgy state-owned firms from the mainland. The risk is that exuberance leads to overpriced deals, and fatigue will soon set into Hong Kong too.
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