| BUSINESSWEEK ONLINE : NOVEMBER 15, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- FINANCE
There's New Bounce in Asian IPO Markets (int'l edition) As economies rev up, companies are hustling to raise money Just a month ago, cash-hungry Asian companies believed that the region's equity markets were all but dead. China National Offshore Oil Corp. (CNOOC), the country's largest producer, scrapped a planned stock sale in mid-October because of weak markets. So did Thai Military Bank. Even Raffles Holdings, operator of Singapore's landmark Raffles Hotel, decided to wait until next year. Then came China Telecom (Hong Kong) Ltd.: The mainland mobile-phone provider surprised everybody by raising a cool $2.6 billion in equity and bonds on Oct. 28. What's more, the Hong Kong government's much dismissed tracker fund, which mirrors the Hang Seng index, is generating considerable enthusiasm, too. Now, businesses ranging from state-owned Korea Tobacco & Ginseng Corp. to I-Cable Communications, a Hong Kong outfit, are falling over themselves to raise money while the going is good. Even Kuala Lumpur will sell shares in Malaysia Airports Holdings. It will be Malaysia's first big initial public offering in more than three years. In all, $2.5 billion or more of stock may hit the markets before yearend (table). The best bets are companies that have strangleholds on their markets, a special niche, or dot.com allure. But there's risk of a glut. ''Investors are probably getting a little fed up with all the paper being thrown at them,'' says Mark J.T. Edwards, vice-president of Hong Kong money managers Rowe Price-Fleming International Inc. What happened? First, Wall Street has cast off its mid-October jitters. Asian markets, and Hong Kong in particular, tend to mimic those in America. And the continued strength of the U.S. economy, a vital destination for Asian exports, has boosted confidence as well. ''People aren't afraid to ask for a lot of money,'' says Colin Stewart, co-head of Asian equity capital markets at Morgan Stanley Dean Witter in Hong Kong. He figures that the average equity deal has doubled in size, to about $500 million, since the days before the financial crisis hit in mid-1997. NEW YEAR STAMPEDE. Of course, markets are expected to dry up after November, as worries about Y2K problems click in. Furthermore, foreign money managers running Asia-focused mutual funds are sitting on average gains of 25% to 30% this year, according to Morgan Stanley. And they aren't likely to risk that--or their bonuses--by taking huge positions in December. So companies that wait until the very end of the year to raise cash could end up empty-handed. Still, barring a world economic shock, Asian companies will flock back to the markets early next year. Although East Asian economies are recovering, plenty of businesses still need equity finance to repair their balance sheets, pay for restructuring, or jump into new markets. And they have few other ways to raise money. Banks from Jakarta to Seoul have their own problems, and many have stopped lending. For example, Japan's big money-center banks, which made 30% of all loans in Asia during the boom years, are cutting off borrowers left and right. Indeed, they have made ''an unprecedented withdrawal from Asia,'' says ING Barings analyst James Fiorillo, slashing outstanding loans by 40%, to $74 billion, since 1997. The region's corporate bond market is far too small to cover the difference. The number of IPOs is only set to grow next year. That worries the likes of Singapore Deputy Prime Minister Lee Hsien Loong. He warned investors recently that they shouldn't treat every IPO ''as if Santa Claus [were] coming to town.'' Same goes for all those cash-hungry companies in the region. By Brian Bremner in Tokyo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS There's New Bounce in Asian IPO Markets (int'l edition) TABLE: Waiting in the Wings INTERACT E-Mail to Business Week Online | |||
