| BUSINESSWEEK ONLINE : DECEMBER 27, 1999 ISSUE | ||||||||
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| WHERE TO INVEST -- STRATEGIES FOR STOCKS
Asia's High-Tech Party Isn't Over Yet Valuations are high, but there's still running room Tokyo fund manager Naoyoshi Yahata should be resting easy these days. His $356 million Japan.com fund at Jardine Fleming Investment Trust & Advisory Co. has soared 130% since its launch in May. But the prospects for high-tech stocks in East Asia have turned Yahata into an insomniac. ''I get so excited I can't sleep,'' says the 37-year-old Yahata, who has also launched an Asia.com fund. ''I keep investing.'' Yahata's not the only one sleepless in Tokyo. Japan's high-tech Jasdaq index has jumped 214% this year, compared with a 31% gain in the broader Nikkei. ''Japan has embarked on a revolution,'' says Masafumi Fujiwara, who manages a $3.3 billion tech fund for Daiwa Asset Management Co. Japan is not alone. In South Korea, Trigem Computer stock has surged 1,643% this year. Taiwan's electronics stocks are up 60%. Indeed, Asia's high-tech party still has a lot of life left. The bargain-basement phase may be over, but the New Economy is just getting rolling. ''Anything that can be made digital will be,'' says Thomas Murtha, vice-president at T. Rowe Price Associates Inc. in Baltimore. ''And anything that can be put on the Web will be. It's that simple.'' The Singapore office of market researcher International Data Corp. figures that outside Japan, Asia's online users will increase 34% in 2000, to 33 million--after a 41% rise this year--and they will spend $5.5 billion on the Net. In the next four years, e-commerce transactions in Japan will increase from $83 billion to $400 billion, according to the Ministry of International Trade & Industry. Clearly, euphoria brings risks. More than 100 new Asian tech stocks are expected to list next year. Old-line companies will also sell themselves as Net plays. Tokyo supermarket chain Ito-Yokado Ltd. wants to develop a cyberbank. Warns Theodore Teo, an analyst at Prudential-Bache Securities in Singapore: ''As one of my clients says, 'There will be a lot of roadkill.''' So pros prefer quality companies that can fulfill their big ambitions. ''There's no shortage of ideas,'' says Murtha. ''What's in short supply are the management teams.'' Murtha's top choice is Fujitsu Ltd., which is emerging as a one-stop shop for everything from chips to Web solutions, even with a price-earnings multiple of 106 times 2000 earnings (table, page 120). BOLD PIONEERS. High valuations shouldn't be a deterrent, providing the company is a market leader. Masayoshi Son's cyberconglomerate, Softbank Corp., and wireless operator NTT DoCoMo trade at p-e's of 2,447 and 154, respectively. But Hidehiro Tomioka, head of research at Invesco Asset Management Japan, expects double-digit increases in 2000 because they lead the pack in capturing e-commerce. China's dominant personal-computer maker, Legend Holdings Ltd., trades at a p-e of 92, but Douglas Lee, executive director of investment research at Goldman Sachs Asia, expects the stock to rise on an earnings jump of 25% in 2000. Many analysts are sticking to bold pioneers such as Hong Kong's Pacific Century CyberWorks Ltd. It plans to bring broadband networking to Asia. Goldman Sachs analyst Rajeev Gupta expects it to keep rising in 2000--and revenues to soar to $3 billion in 2004, vs. $31 million in 2000. In South Korea, investors are less interested in dot.com concept stocks than in companies serving the nation's fast-growing band of cybertraders. Already, some 1.4 million Koreans trade online. Jang Dong Hun, a fund manager at Korea Investment Trust Co., is investing $1.5 billion in Korean high-tech stocks. His favorite: Korea Telecom Corp., whose shares tripled in 1999. The stock could rise by 75% in 2000, analysts say. Other pros focus on companies supplying cyber building blocks. Nathan D. Emerson, chief executive of ABN Amro Asia Ltd.'s Taipei branch, expects the stocks of Taiwan's top two chipmakers, United Microelectronics Corp. and Taiwan Semiconductor Manufacturing Co., to rise 30% more in 2000 after more than doubling in 1999. The region's great leap into the Internet Age has just begun. If you can hang on and pick the right stocks, it should be worth the ride. By EMILY THORNTON With Moon Ihlwan in Seoul and Ron Corben in Bangkok _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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