| BUSINESSWEEK ONLINE : APRIL 24, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- ASIAN BUSINESS
Hong Kong: The Internet Is So Yesterday (int'l edition) Hong Kong's fickle investors are shunning the dot-coms Two months ago, Hong Kong's Acme Landis Holdings was an obscure toilet bowl maker. Then venture capitalists Hambrecht & Quist Asia Pacific Group and J.H. Whitney bought the company and announced plans to turn it into an Internet investment vehicle. That sent the stock soaring twentyfold, to $3.34, in two weeks. The company, renamed i100 Corp., used some of its $26 million in capital to forge a partnership with Germany's Windhorst Group to bring e-business to greater China. It also said it would buy a developer of Web solutions for publishers. But just as quickly as they fell in love with Acme Landis, Hong Kong's investors abandoned the stock, pushing its price back down to 46 cents. ''Everybody is still saying positive things about us,'' says Laurie Kan, the company's baffled president. ''But our share price--well, that's something else.'' Kan is just the latest executive to learn the hard way that Hong Kong investors are among the most fickle in the world. Whatever the latest fad--be it property, telecoms, or Chinese ''red chips''--the city's speculators jump in with reckless abandon. But when the romance ends, watch out. Witness the latest sell-off in Asian tech stocks. An explosive runup awarded half-baked Net companies multibillion-dollar market valuations. But now, Hong Kong companies ranging from Net mogul Richard Li's Pacific Century CyberWorks Ltd. (PCCW) to SuneVision, the e-biz flagship of the wealthy Kwok property family, have seen their stocks plunge by up to half. ''NO BAD THING.'' The big worry is that a blowout among the first wave of Internet stocks could poison the well for Hong Kong startups with solid e-business strategies. The fallout is already apparent. GreaterChina Technology Group Ltd., which owns Web sites offering services ranging from health care to business information, tanked on its first trading day, Apr. 6, to less than half its offering price. Since then, three companies have pulled their Hong Kong IPOs. Among them: China Infonet, owner of a business database on China, and ColbyNet Ltd., an e-business site backed by 25-year-old apparel and consumer-goods trading company Colby International. The pullback could complicate the ambitious plans of Asian Net moguls who had been using their inflated stock to go shopping. In just two months, more than $17 billion has been wiped off the market value of PCCW. That could imperil Richard Li's original $38 billion bid to acquire Cable & Wireless HKT Ltd. Since most of the offer was in stock, the offer's value is now down to $28 billion. Some speculate that Britain's Cable & Wireless Communications PLC could demand that Li pony up more cash and shares. The plunge in stock prices also has eaten into the war chest of Hongkong.com, whose parent is chinadotcom Corp. Its plans to raise capital for a $100 million purchase of online retailer TheBigStoreAsia.com are now in jeopardy. ''Suddenly their cybercash isn't worth very much,'' says Alfred Ho, chief investment officer for Invesco Asset Management. There may be a bright side. ''A shakeout is no bad thing,'' says Ajmal Rahman, head of equity capital markets at Merrill Lynch & Co in Hong Kong. As weaklings get weeded out, savvier newcomers could push e-commerce to the next level. Unless, of course, Hong Kong's finicky investors stay spooked. By Frederik Balfour in Hong Kong _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Hong Kong: The Internet Is So Yesterday (int'l edition) TABLE: Falling at Net Speed in Hong Kong INTERACT E-Mail to Business Week Online | |||
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