Tech stocks more vulnerable than counterparts on Nasdaq
SAMUEL YEUNG
Hong Kong has borne the brunt of the recent volatility in technology share prices because the local market is more speculative than US bourses, according to analysts.
"Many local tech stocks are only name-changing plays and lack concrete business models," Tung Tai Securities associate director Kenny Tang Sing-hang said. "As a result, they are more vulnerable than their Nasdaq counterparts."
The technology-heavy Growth Enterprise Market ended the week on Thursday at 604.81 points, down 40.8 per cent from its 1,021.74-point all-time high last month.
Technology indices at Tanrich Securities and Dao Heng Securities have also plummeted.
The Tanrich Technology Index has fallen 43.05 per cent from its high last month, while the Dao Heng Securities Technology Index has dropped 34.71 per cent.
The hit taken by the local technology market in this period makes losses on the Nasdaq stock market in the US appear mild.
On Thursday, the Nasdaq Composite Index finished the week at 3,643.88 points, down 27.84 per cent from its record high of 5,048.62 points on March 10.
However, the tech-heavy Nasdaq was down 5.8 per cent in early trading yesterday at 3,430.66 points.
Mr Tang pointed out many Hong Kong plays had plunged 70 to 90 per cent in recent weeks.
The heaviest falls were seen in counters that jumped sharply on the back of backdoor listings by foreign companies.
Softbank Investment, previously known as Cheung Wah Development, on Thursday closed at HK$2.675, down 83.58 per cent from its high of HK$16.30 in February.
Japan-based Softbank took over the company in January.
Hikari Tsushin International, previously known as Golden Power, closed at 73 HK cents, compared with its year high of HK$5.175 in January.
Japan-based Hikari Tsushin took control of the company in December.
Similarly, Acme Landis plunged to HK$2.075 on Thursday, a 89.92 per cent slump from its high of HK$20.60 in February, when a group of investors led by US-based venture-capital company Hambrecht & Quest Asia Pacific announced it would take control of the company.
Also, the share prices of 16 out of 23 companies on the Growth Enterprise Market have dropped below their initial public offering price.
As a result, companies such as Caripac.com and China Infonet have deferred their local floatation plans.
"We have no immediate plans for listing," said Steve Loo Chung-keung, who founded Internet start-up New China Online in January.
Slumping share prices have also dampened the appetite for funding asset acquisitions through new share issues, a popular and cheap way in which Internet companies finance expansion plans.
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