Video Game Empire - Chapter 685

Of course, David Wilson’s last year as Hong Kong Governor did not only promote the Shenzhen Bay Bridge and the West Rail Line, but also the second new independent stock exchange market in Hong Kong. ——The Growth Enterprise Market of Hong Kong Stocks was officially established.

Under the vigorous promotion of the Hong Kong government, the four stock exchanges of the former Hong Kong Association, the Far East Association, the Gold and Silver Association, and the Kowloon Association have just completed the merger six years ago. The newly established Hong Kong Stock Exchange after the merger has finally ended the fragmented and chaotic situation of Hong Kong’s securities financing market, and Hong Kong stocks have also entered a new era of more standardization and transparency.

However, the establishment of the Hong Kong Stock Exchange has further raised the threshold for Hong Kong enterprises to obtain financing from the securities market. According to the latest revision and promulgation of the “Listing Rules” issued by the Stock Exchange, listed companies must be companies with paid-in capital exceeding HK$50 million and a good operating history for at least 5 financial years. This has blocked a large number of emerging companies that are harsh on financing from the door of the Hong Kong stock market.

In the global innovation capability ranking published by Fortune magazine not long ago, Hong Kong ranks 11th among all countries and regions in the world, and has even surpassed many old developed countries. Among them, Hong Kong Electronics Co., Ltd. represented by Oriental Group The industry naturally contributes.

However, although the Oriental Group is the leader of the electronics industry in Hong Kong, it cannot represent the whole of the electronics industry in Hong Kong. For example, according to a survey conducted by the Hong Kong Economic Journal not long ago, Hong Kong currently exports as many as 137 types of electronic terminal consumer goods, covering various fields such as home furnishing, toys, and electrical appliances. The main electronic consumer products of the Oriental Group are actually only concentrated in a few categories such as televisions, computers, and game consoles.

These companies that produce a wide variety of products naturally cannot have huge financial strength like Dongfang Group. Not only are banks chasing behind the buttocks and want to send loans, even if they issue bonds, they are all rated AAA. For ordinary companies, listing on the stock exchange is the most efficient and cheapest financing method.

On the other hand, under the guidance of Li Xuan’s LH Fund, Hong Kong’s venture capital industry has developed rapidly in recent years, which not only promotes technological innovation in Hong Kong, but also brings a large amount of initial capital to a large number of new companies.

But these venture capitalists are not philanthropists, and they are willing to take huge risks to bet on baby companies in order to reap outsized returns on their investments. The best way to exit with liquidity is to promote the public listing of the invested companies in the stock market, and let thousands of ordinary investors in the Hong Kong stock market take over.

Therefore, in recent years, both the Hong Kong corporate sector and the financial sector have been calling for the establishment of a new stock exchange that is different from the Stock Exchange and aims to provide a new fundraising channel for emerging companies with growth potential.

After feeling the rising voices from all over Hong Kong, Governor Wilson resolutely followed the public opinion and requested the Hong Kong Securities Regulatory Commission, together with the Securities and Futures Commission, to conduct a feasibility study immediately. Then, it took less than a year for Hong Kong’s second stock exchange, the Hong Kong ChiNext, to open its doors amidst cheers and drums.

The opening date of the Hong Kong Growth Enterprise Market is set for the first Monday in May – May 2. And just a week ago, the largest IPO in the history of the Hong Kong stock market just came to an end.

Initially, the opening date of the Hong Kong Growth Enterprise Market was selected on March 30, but considering the initial market conditions of the exchange, it will have a great impact on attracting new investors to join. The listing of a giant company like the Oriental Research Institute will definitely have a great capital siphon effect, which will have a considerable impact on the entire stock market.

Therefore, the GEM chose to open after the listing of the Oriental Research Institute, not only to avoid the market fluctuations caused by the other party’s listing, but also to share the investment boom brought about by its listing.

The actual situation is also true. As early as half a month before the listing date of the Oriental Research Institute, the daily turnover of Hong Kong stocks began to gradually increase, and funds continued to be withdrawn from the stock market, causing the Hang Seng stock index to drop all the way.

You must know that under the blessing of the good news from the talks between the north and the south, the Hong Kong stock market began to usher in a wave of rising prices at the end of March. But this wave of market was abruptly suppressed because the listing of the Oriental Research Institute was approaching. These withdrawn funds did not really leave the stock market, but were waiting to participate in the IPO of the Oriental Research Institute.

According to the listing information provided by the Oriental Research Institute to the Hong Kong Stock Exchange, the actual valuation of the company is 235 billion Hong Kong dollars (about 30 billion US dollars), and the total share capital is 2.35 billion shares, equivalent to 100 Hong Kong dollars per share. Due to the needs of future development, the company will issue 415 million new shares to the market, raising a total of 41.5 billion Hong Kong dollars!

At first glance, this amount is indeed staggering. It is higher than the total market value of most blue-chip stocks in the Hong Kong stock market, but it is not exaggerated to the point of causing the entire stock market to fall continuously. What’s really striking is that Oriental Research Institute’s shares were 107 times oversubscribed by Hong Kong public investors.

Investors in the stock market can be roughly divided into two categories, one is ordinary public investors, also known as retail investors, and the other is institutional investors. In a mature stock market, institutional investors are often the core and mainstream of market transactions.

Hong Kong stocks are no exception. Although there are still plenty of gamblers who want to get rich overnight by winning a fairy stock, more and more investors have been educated again and again by the skyrocketing and slumping market. Instead, use the funds to buy stock funds and let more professional fund managers help you manage your money.

Therefore, only 10% of the new shares listed on the Hong Kong stock market are usually subscribed to all investors, while the remaining 90% will be directly sold by the IPO underwriters to institutional investors who have good cooperation with them.

Of course, if ordinary investors are highly motivated to subscribe and over-subscription occurs, the securities firms responsible for underwriting new shares will also have a proportional callback mechanism in order to meet the needs of ordinary investors.

Generally speaking, when the subscription ratio of new shares exceeds 15 times, the proportion of new shares in public offering will increase from the original 10% to 30%, more than 50 times will increase to 40%, and more than 100 times will increase to 50%.

Under normal circumstances, even if new shares are wildly sought after, they are rarely oversubscribed by 50 times, let alone 100 times. Occasionally there are one or two exceptions, mostly because the total market value of new shares is very small, resulting in a small proportion of new shares issued, which will lead to an extreme shortage of supply.

However, the total amount of funds raised by the Oriental Research Institute is as high as 41.5 billion Hong Kong dollars. Even if only 10% of the funds are for ordinary investors, it is still 4.15 billion Hong Kong dollars. Even with this scale of funds, it has actually been firmly ranked among the top ten IPOs of Hong Kong stocks of the year.

But the Oriental Research Institute is obviously an anomaly. First of all, its own financial data is very good! In the last fiscal year, the company’s total annual revenue was as high as HK$100 billion (US$12.8 billion), with pre-tax profits of HK$25.5 billion, according to financial data disclosed by the company.

That is to say, the price-earnings ratio of the Oriental Research Institute is only about 11 times, not to mention that it is far lower than the high price-earnings ratio of high-tech stocks of 15 times and 20 times, and even lower than the current average price-earnings ratio of Hong Kong stocks of 13.2 times.

What’s more, this level of profitability was achieved under the R&D investment intensity of the Oriental Research Institute as high as 28%. R&D investment intensity refers to the proportion of the company’s annual investment in scientific research, which accounts for the total revenue.

How could Huawei, in another time and space, grow to such an extent that the U.S. government is worried? This is what Huawei has exchanged for long-term and huge R&D investment. Technological innovation cannot tolerate any fraud!

According to data released by the European Union, Huawei ranked fifth in the world with a R&D investment of 11.3 billion euros in 2018, and China ranked first, surpassing Intel (10.9 billion euros) and Apple (9.7 billion euros). You must know that Chinese companies have always been known as price butchers, and their profit margins are far less than those of their European and American counterparts.

Huawei can say that almost most of its profits are invested in research and development. In addition, China’s labor cost is much lower than that of developed countries in Europe and the United States. For the money paid by European and American counterparts to hire one scientific researcher, Huawei can hire two or more scientific research migrant workers. Therefore, it is also a matter of course that it can eventually surpass its European and American counterparts in technology.

No pay, no return!

If in the first few years, the Oriental Research Institute could still rely on Li Xuan’s golden finger to achieve rapid growth, then the company has not only maintained its leading edge in the chip field, but also flourished in other fields such as LCD and mobile communications. It relies entirely on R&D investment at all costs.

Based on 28% of the research and development investment intensity of the Oriental Research Institute, the company’s annual research and development expenditure is as high as 28 billion Hong Kong dollars. What’s more, most of the R&D personnel of the Oriental Research Institute are located in Asia. Like Huawei in another time and space, they can also gain a huge advantage in labor costs when competing with their European and American counterparts.

Under such high-intensity capital investment, since 1986, the Oriental Research Institute has applied for more than 500 new patents every year for six consecutive years. In terms of numbers, it has overwhelmed Japanese companies such as Toshiba, Hitachi, and Canon, and has become the technology company with the largest number of patent applications in the world.

In the first three months of this year, the number of patents approved by the Oriental Research Institute has reached 443, continuing to rank first in the world. If the profitability of the Oriental Research Institute represents its present, then the ability of enterprise scientific research and innovation represents the future!

The Oriental Research Institute not only has a beautiful present, but also has a bright future! In addition, Li Xuan is well-known in Hong Kong as the “God of Wealth Li”, so the stock of the Oriental Research Institute is unanimously sought after by Hong Kong people, which is naturally a normal thing!

You must know that those stock brokerage companies have actually started to use the opportunity of the Oriental Research Institute to attract people to open accounts. They directly shouted the slogan “Miss this time, regret for a lifetime”, and took the trouble to preach to people that the Oriental Research Institute is the last core subsidiary of the Oriental Group that has not yet been listed. Money opportunities will be struck by thunder.

So under the instigation of this group of people, even many elderly people in their 60s and 70s who didn’t even know a few words wanted to touch the wealth of “God of Wealth Li” and went to securities companies to open accounts.

As a result, the Hong Kong stock market has seen a surge in investment accounts, but the market capital has been continuously withdrawn. At the same time, even the fixed deposits of various banks have fallen sharply, and some small banks have even experienced a dilemma of liquidity shortage.

All of this stems from the regulations of the Stock Exchange, which requires the freezing of funds for investors to subscribe for new shares. The total amount of funds raised by the Oriental Research Institute is 46.5 billion Hong Kong dollars, which is 4.15 billion Hong Kong dollars if 10% is issued by ordinary investors.

However, the new shares of the Oriental Research Institute were oversubscribed by 107 times, which means that the total amount of funds to be frozen is as high as 444 billion Hong Kong dollars.

What concept is this?

The total deposits in Hong Kong at the end of last year were less than 2 trillion Hong Kong dollars, and one-fifth of them will be frozen due to a new share issuance!

Of course, this does not mean that Hong Kong people really put up one-fifth of their deposits to bid for the shares of Oriental Research Institute. After all, various securities companies will provide investors with leverage ranging from multiples. And the money is not really frozen, and still continues to be stored in the banking system.

However, this still caused huge chaos in the financial capital market in Hong Kong, so that the Hong Kong Stock Exchange had to issue an announcement as soon as the wave appeared, making a special case for the IPO of the Oriental Research Institute, not freezing new funds, investors You only need to subscribe for funds within 24 hours of signing the new shares.

In fact, the special case given by the Stock Exchange to the Oriental Research Institute is not only in the aspect of making new funds and not freezing them. According to the “Listing Rules”, the proportion of new shares to the total share capital cannot be less than 25%. However, the size of the Oriental Research Institute is too large, so the Stock Exchange also gave a special case to the issuance of new shares. The shares in this IPO only account for 15% of the total share capital~www.mtlnovel.com~ Oriental Research Institute The IPO price was HK$100 per share, but the actual opening price was as high as HK$124.7. The opening price rose 24.7%, which is not very prominent in the history of Hong Kong stock IPOs, but if you look at the size of the Oriental Research Institute, it is very scary.

When the stock market closed on the first day, the share price of the Oriental Research Institute had risen to 126.5 yuan, and the total market value of the Oriental Research Institute had also ballooned to 350 billion Hong Kong dollars!

Before the listing of Oriental Research Institute, the total market value of Hong Kong stocks was around HK$1.4 trillion. That is to say, in one day, the total market value of Hong Kong stocks increased by 25%. After the listing of the Oriental Research Institute, its market value accounted for one-fifth of the total market value of Hong Kong stocks.

The public listing of the Oriental Research Institute was called by the Hong Kong media as an unprecedented rain of red envelopes in Hong Kong. According to a report on the second day of the Hong Kong Economic Journal, at least 700,000 people in Hong Kong have increased their assets by HK$5,000 in a single day! This is also the opening price of the stock, which is also the lowest price for a single day.

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