MARKET TALK-HK -- CWAHF slumps 15%, Harbour Ring aka ICG Asia short term target price HK$20.
Friday, March 10 4:16 PM SGT
MARKET TALK-HK: Hang Seng Gains 1.1%...
1615 [Dow Jones] Hang Seng closes 1.1% higher at 17832, mainly on 7.3% gain in Hutchison Whampoa (0013) and 3.3% rise in Hutchison's parent Cheung Kong (0001). Stocks buoyed on Hutchison's JV with U.S.-based Internet Capital Group to take over Harbour Ring (0715), which vaulted 530% to $7.75 on strong fund buying. Traders say market to trade between 17300 and 18000 next week, with sentiment remaining cautious before Fed meeting on U.S. interest rates March 21.(CKC)
1555 [Dow Jones] Discount in Hang Seng March futures relative to spot reflects expected loss in Hang Seng index Monday due to Hang Seng Bank (0011) and HSBC (0005) going ex-dividend, says Sunny Wong, dealing director at Tai Fook Securities; March futures up 1.1% to 17750, 67-point discount to spot, up 1% to 17817.(STT)
1550 [Dow Jones] New World Telephone, loss-making fixed-line unit of New World Development (0017) will finalize stake sale to Australia's Davnet by March 20, according to Davnet official; adds New World Telephone wishes to retain greater involvement in company, implying stake to be sold may be smaller than 74% as agreed in January. New World Development up 1.8% to $11.20.(KWW)
1545 [Dow Jones] STOCK CALL: ING Barings maintains buy recommendation and sets 12-month target for International Bank of Asia (0636) at $1.98, based on DCF model; says slower than expected loan growth and lower net interest margins (estimated 2.69% for 2000, compared with 2.95% for 1999) leads to higher ROE (estimated 6.6% for 2000, compared with 0.7% for 1999); IBA now at $1.56, up 1.3%.(VWY)
1543 [Dow Jones] Possible pre-weekend HKD selling could set up outflow from local banking system, says trader. Short end Hibor rates below USD Libor, setting up arbitrage trade against HKD that could see USD/HKD hit HKMA convertibility rate and set up outflow.(EVZ)
1537 [Dow Jones] Rumors that Goldman Sachs has set short-term target for Harbour Ring (0715) at $20 continue to fuel share buying, traders say. "We've heard a lot about this rumor, but I haven't seen any stuff like that myself," says equity salesman with U.S. brokerage. Goldman Sachs not available for comment. As well, "investors seem very heartened by Internet Capital Group's business plan in HK," says institutional sales director at European brokerage. Hutchison (0013) and U.S.-based ICG have formed JV to takeover Harbour Ring; stock up 510% at $7.50.(CKC)
1530 [Dow Jones] HK one-year forward found a bottom around 55-60, the low of last session and this year, and has been drifting higher along with rest of curve since. Now at 72-75 from 65-70. Trader says six-month rate close to par is quite dangerous given likely U.S. rate hike and potential problems from Taiwan elections.(EVZ)
1528 [Dow Jones] China Merchants (0144) outperforms broad market on speculation it may be included in Morgan Stanley's MSCI China Free Index, says trader at local brokerage; now up 7.8% to $5.55; however says gains likely unsustainable as investors seem to bid up potential MSCI China Free Index candidates and then take quick profit.(STT)
1519 [Dow Jones] Tumbling major tech counters in Japan (including Hikari Tsushin and Softbank) hurt sentiment in HK bourse, traders say, advising investors to avoid stocks which have links with these Japanese Internet investment giants. Hikari Tsushin's listing vehicle Golden Power (0603) now sheds 15%, while Softbank's flagship Cheung Wah (0648) slumps 13%. Pacific Century CyberWorks (1186) which holds 20% of Golden Power, down 5%. Patrick Yiu at Kingsway Securities says sharp fall in Hang Seng in early afternoon trade was due to poor sentiment in these stocks; index now recovers to be up 0.2%.(CKC VWY)
1512 [Dow Jones] Slight bargain-hunting through U.S. investment banks including Merrill Lynch and Morgan Stanley, helps Hang Seng back into positive territory after dipping to intraday low at 17574.06; now up 0.4% to 17715.(STT)
1509 [Dow Jones] Stop-loss selling in Hongkong.com (8006) through local brokerages triggers sharp decline across tech sector, says trader at local brokerage; Hongkong.com down 29% to $4.80; with volume at $1.17 billion, is second most heavily-traded stock after Harbour Ring (0715) at $1.19 billion. Tom.com (8001) down 12.1% to $10.85 on heavy volume of $591.7 million. Vanda Systems (0757) down 7.8% to $5.95.(STT)
1505 [Dow Jones] Harbour Ring (0715) gets strong buying by fund managers, who are switching from other tech counters on news of its takeover by JV between Hutchison Whampoa (0013) and U.S. Internet Capital Group. Further upside seen for stock, which is up 500% at $7.40, says trader at European brokerage. "We've got rumors here saying Harbour Ring's market cap could exceed that of Pacific Century CyberWorks (1186), as investors seem very excited at having ICG coming to list in HK," he says.(CKC)
1454 [Dow Jones] SUNeVision, tech flagship of Sun Hung Kai Properties (0016), sets IPO price at $10.38 for debut on GEM board next Friday. It will raise minimum $3.11 billion by issuing 300 million shares, or $3.58 billion if greenshoe option of 45 million shares is exercised.(VWY)
1446 [Dow Jones] Red-chip subindex underperforms broad market, down 5.8% to 1,576.72 on profit-taking in heavyweight Legend (2982), down 10% to $13.50. Losses also in Founder (0418), down 10% to $7.50, and Stone Electronic (0409), down 5% to $4.68.(VWY)
1439 [Dow Jones] Profit-taking sends Hang Seng lower in early afternoon trade, now down 0.1% at 17617. Hutchison Whampoa (0013) narrow gains, now up 4% to $142.(VWY)
1437 [Dow Jones] Analysts say Beijing's approval of international long-distance telephone service for China Unicom sweetens its prospects as it tries to finalize overseas listing plans this year. Green light from MII lets Unicom compete with China Telecom (0941) for most profitable piece of China telecoms pie and is further government move to unravel China Telecom's one-time market monopoly. Sources say Unicom now targeting late May for IPO.(JRD)
1432 [Dow Jones] Swire Pacific (0019) unaffected by 152% jump in FY99 net profit to $4.44 billion even though result slightly above Barra Global Estimates' consensus figure of $4.37 billion, says Eddie Lau, analyst at ABN Amro; says robust result mainly driven by strong earnings from 44%-owned Cathay Pacific (0279). Shares still down 1.4% to $34.4.(STT)
[Questions and comments please to Stephanie Tam at (852) 2832-2346 or stephanie.tam@dowjones.com. Currency amounts are in Hong Kong dollars and time is local Hong Kong time.]
asia.biz.yahoo.com
Business: Hong Kong Vs. Singapore
A new variation on a very familiar story
By ASSIF SHAMEEN
March 9, 2000
Web posted at 4:15 p.m. Hong Kong time, 3:15 a.m. EST
If you thought the Singapore-Hong Kong rivalry was restricted to tourist attractions and telecom takeovers, you have missed the action on the stock exchanges. Both cities are vying to be premier financial services centers in the region and both want to attract foreign portfolio investments as well as boost retail online trading. Both are trying to attract more dot-com IPOs (initial public offerings) not just from local companies but from companies around the region. As Asian populations start graying, the biggest prize of all might be in the fund-management arena. So far Hong Kong has had the lead but that lead is being eroded by the day. Last week, the competition just got more intense.
Three days after Hong Kong's Pacific Century CyberWorks trounced SingTel in the battle to take over the Hong Kong telco, HKT, Singapore announced sweeping amendments to its listing rules. Having lost one big battle, it wanted to make sure the war was still on. Then on March 6 Hong Kong followed with several new moves of its own -- mainly pertaining to commissions and fees. Each city is trying to close the gap where the other has a perceived lead.
Singapore, having missed the boat on Internet IPOs and backdoor listings, wants to catch up. The new rules cut the lock-in period for "promoters" of IPOs (it's just six months now) and redefine who might be considered a promoter (the directors and anyone owning 5% or more of the company). Singapore also announced relaxation of rules on IPO's documentation. It is now easier to apply for a listing by submitting a draft prospectus instead of providing a draft plus a formal application of listing. Moreover, the draft prospectus for companies listing both on the Singapore exchange and the Nasdaq need comply only with American accounting standards, rather than both U.S. and Singapore standards. Hong Kong's SEC and Stock Exchange has already given such waivers to recent listing candidates like tom.com and Singapore just wanted to keep things even.
Hong Kong, on the other hand, hasn't moved fast enough to cut commissions, stamp duties and other charges that Singapore started deregulating last year. Last week, Hong Kong officials and regulators announced that they were abolishing minimum brokerage commissions and minimum rates for stamp duty on securities transactions. Hong Kong will remove its 0.25% minimum charge on all securities transaction from the end of March 2002. The charge will be cut in several stages until it is completely abolished in two years. The Hong Kong government also announced reducing the 0.11% minimum stamp duty on securities transactions. The transaction levy that is shared between the government and HK stock exchange will be drastically cut too.
Still, transaction fees in both HK and Singapore won't fall to the levels that traders in U.S. pay to online brokerages such as E*Trade or Schwab anytime soon. Of course, there are online brokerages in Hong Kong, like Boom.com, but a minimum trade there could set you back upwards of U.S. $100. In the U.S., parts of Europe and Australia, the going rate for an online trade is U.S.$ 20. It could be18 months before transaction fees get that low in Asia. Only then will the popularity of online trading in Singapore and Hong Kong start to match that of Korea, where Internet trading now makes up 50% of all transactions in the Korean Stock Exchange.
For Singapore, relaxation or some fine-tuning of listing rules isn't going to open a flood of IPOs. Certainly, not just yet. For starters, there is still a perception that the regulatory regime in the island-republic is too strict. Some of the dot-com companies in Singapore I have been talking to have been thinking of listing in -- of all places-- Hong Kong. They claim that the meteoric rise of Pacific Century CyberWorks, the remarkable IPO of tom.com (whose price has surged sevenfold since the listing two weeks ago) and the backdoor-listing successes of Asian affiliates of Hikari Tsushin and Softbank is proof that Hong Kong investors understand the true value of technology (or at least are able to give tech stocks a higher valuation). Why risk listing in Singapore, they say, when you are guaranteed success in Hong Kong? Moreover, the listing queue in Singapore is far too long. A dot-com that decides it wants to list immediately may need to wait at least seven months before its shares are actually traded on the Singapore bourses. In Hong Kong, Li Ka Shing was able to get tom.com listed in six weeks. Sure, not everybody has the name and clout of the Superman, but even unknown entrepreneurs can get their companies listed in four months maximum.
Investment bankers and regulators in Hong Kong move far faster than their Singapore counterparts. There are stories of some Hong Kong investment banks getting a draft prospectus ready in three days (in more normal times, getting the draft just right could take a month or two). Such stories only add to the tech stock mania.
But what's the big deal whether a company lists in four months or seven months? Well, no one knows when the tech stock bubble might run out of air. Imagine that two companies applied for listing today -- one in Hong Kong and the other Singapore. If the bubble bursts in five months, the Hong Kong company would have just scraped through, while the Singapore company would either have had to put off its listing or accept a much lower valuation in a very volatile environment. It is exactly that sort of uncertainty that is forcing dot-com companies to go public fast, but with half-baked business plans, in Hong Kong. Of course, all this will ultimately expedite the the bubble's end. But the tech stock correction will be short-lived, and both Singapore and Hong Kong are now rightly looking at creating a better playing field for well beyond the current stock market cycle and the next one.
Still, Hong Kong is ahead in the dot-com race and the Singaporeans don't like it. While the Hong Kong market has held up nicely since Richard Li's triumph last week, foreign funds have been exiting Singapore. Their perception evidently is that regulated Singapore isn't quite ready for the world of tumultuous takeovers and cut-throat competition the way Hong Kong is. By making bold changes in other areas, Singapore is trying to send a message of sorts: It is still in the game.
cnn.com |
