''It is China. It is the Internet. It holds the promise....."
Ref:To read about Yuan devaluation speculation and Duff & Phelps take on it go here----> (DCR Says Chinese Devaluation Likely But China and Hong Kong May Avoid Negative Impact)(http://biz.yahoo.com/prnews/990713/dcr_chines_1.html)
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China.com more than triples after $20/shr IPO
(adds more analysts quotes, details in grafs 5, 9-15 updates closing stock price)
By Reshma Kapadia
NEW YORK, July 13 (Reuters) - Shares of Internet portal China.com Corp. (Nasdaq:CHINA - news) more than than tripled as its initial public offering debuted on Tuesday.
China.com, which operates Chinese and English-language Web sites, closed up $47.12 at $66.12, up about 236 percent from its $20 offering price, with trading of more than 13 million shares.
The Hong Kong-based company, which is viewed as the gateway to China on the Internet, raised $84 million after pricing its deal above the expected range. Lehman Brothers was the lead underwriter on the deal.
The strong draw of the Internet -- as well as an opportunity to tap into China as Asian economies continue their recovery -- attracted investors. America Online Inc. (NYSE:AOL - news) and Sun Microsystems' (Nasdaq:SUNW - news) hold stakes in the company, which added credibility to the deal.
China's New World Infrastructure Ltd. was the largest single shareholder with 22.7 percent before it went public. China's official Xinhua news agency owned 13.6 percent.
''It is China. It is the Internet. It holds the promise of being able to jump in on the ground floor on an Internet service provider that is going to serve two billion people,'' said Irv DeGraw, research director of WorldFinanceNet.com.
Despite the initial hype over the offering, some traders and industry watchers remained skeptical about its long-term prospects.
Among their top concerns is censorship.
''You have to consider the business model in a country that is not the U.S. It has to be put into context of the reality of the sociopolitical and economical factors (in China), such as censorship, politics, culture and the standard of life in China,'' said Steve Harmon of Internet.com.
Institutional investors were not heavy buyers of shares, said one trader specializing in Asian issues. Retail investors have often been behind the sharp gains in Internet IPOs.
''Institutional investors are making the right decision to see how the stock settles. They will increase their weighing in the stock once they see proof of page hits, and sales are starting to increase,'' said Eric Ritter, manager of Driehaus Mutual Funds' Asia-Pacific Growth Fund. The fund got a small allocation of the offering, and Ritter said he would look to increase the weighting.
The prospects for an untouched market appear to have won over investors. The number of Internet users is expected to grow to 16.1 million by 2003 from 2.4 million in 1998, according to International Data Corp.
''Content in Asia is incredibly underprovided, and that provides a huge opportunity for China.com and any other content provider,'' Ritter said. ''Even though the government has an equity stake, it doesn't mean that they can't provide content that is apolitical. The main reasons for Internet sites to be used is travel and shopping.''
The recent success of StarMedia Network Inc.(Nasdaq:STRM - news), an online network for Latin America, benefited China.com. StarMedia's offering in late May piqued interest in deals with an international flavor, as investors sought different regions that were seen as ''wide-open,'' Harmon said.
''Even though U.S. Internet stocks are not doing well because there is too much supply,'' Ritter said, ''the Asian Internet story is just beginning ... ''
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