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November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

AsiaweekTimeAsia NowAsiaweek

MARCH 3, 2000 VOL. 26 NO. 8

Is This The Way To Invest Sensibly?
Hong Kongers are going nuts over an IPO with no history but a big name behind it

Hong Kong is a city where serious people seem to regularly lose their minds over the prospect of serious money. But knowing that wasn't preparation for the frenzy surrounding the application process to buy shares in the initial public offering of, a weeks-old Internet start-up from tycoon Li Ka-shing. Police estimated that more than 200,000 people turned out Feb. 23 to file applications at just 10 designated branches of HSBC, Hong Kong's biggest bank with more than 200 branches in the special administrative region. The number was limited by's lead underwriter, BNP Peregrine. Streets around each of the branches were jammed for blocks. Actual bank customers couldn't get near their branches, and some nearby stores simply closed for the day.

In the end, retail investors applied for up to 2,000 times the number of shares available to them. is expected to list on the Growth Enterprise Market (GEM) March 1, at which point the frenzy over filing IPO share applications may seem tame. The price of the stock initially should be about 23 cents (HK$1.78 - the high end of a range set out in the IPO prospectus). The current gray market price for shares is about six times the initial price. This is necessarily an estimate because traders say there are in fact no sellers - no one is apparently willing to part with shares before the launch.

Cover: The Scapegoat?
Blamed for the riots surrounding the fall of Suharto, controversial ex-general Prabowo Subianto tells his story
- Investigation: No single "mastermind" was behind the May 1998 turmoil. There were many players, and many plots
- Insight: Re-examining Prabowo's record in East Timor
- Insider: How the general and son-in-law benefited - and was compromised - by being part of the First Family

Editorial: The Internet is the most compelling agent of economic reform
Editorial: A good year for Kim Jong Il - but watch out

Malaysia: The real campaign for national leadership heats up
- Anwar: A decision on Mahathir's testimony is put off again
- Shadows: A play looks at Malaysia's troubled political soul

Hong Kong: The former colony is starting to trust the motherland

Taiwan: Beijing demands unification talks - or else

Japan: Obuchi raises (but doesn't fire) the starting gun for polls

Cambodia: A culture of violence and impunity undermines justice

Fashion: The spirited new styles suit Asia's mood
- Accessories: The rule is - there is no rule
- Menswear: Casual, chic - and inspired by womenswear
- Kenzo: The Japanese couturier bids farewell to the catwalk Investors rush for a piece of a Hong Kong company with no history, few employees and lots of hype

Kosdaq: Korea's over-the-counter stock market soars

Scandal: Can Manila recover from the BW Resources fiasco?

Investing: Betting on the New India

The Net:
The freebie formula gets tested in Singapore

Cutting Edge: A keyboard you can fit on your Palm

Newsmakers: Japan's crown prince vents his anger

Viewpoint: To fight corruption, reform China's politics

If it's in Asia, it's in Asiaweek


Analysis and commentary from the Asian Edition of TIME Magazine
Asia's most comprehensive source for latest breaking news and information

There are, nevertheless, doubters. At a recent presentation before big-wheel investors and fund managers in Singapore, for instance, the smoked salmon, consommé and light show won raves (see Assif Shameen at Asiaweek Online, - but the presentation itself fell flat, according to some who saw it. Chief executive Carl Chang, dressed in baggy cotton pants and a wrinkled shirt, was asked some tough questions: How does the company plan to recruit talented people in a thin market for tech-skilled labor? Exactly what does the company plan to do to make money. His frequent answer: We need a successful IPO. After the show, much of the conversation among fund managers centered on the salmon - was it flown in from Alaska or Seattle? But as for actually investing in the company, one investor said simply: "I have real work to do at the office."

Back in Hong Kong, Chang spoke with Asiaweek and insisted the company was off to a good start in terms of attracting visitors to its website. Eventually, the company plans to develop multilingual portals for China-related infotainment. says it has 70,000 registered users and 2.5 million daily page views.

Whatever the prospects might eventually be for the company's business plan, the real reason Hong Kong investors have been so hungry for the IPO of a start-up with no history, few employees and a motherlode of hype can be summed up by a single name: Li Ka-shing. The Hong Kong tycoon, together with his sons, Richard Li Tzar-kai and Victor Li Tzar-kuoi, control three key conglomerates: developer Cheung Kong, Hutchison Whampoa and Pacific Century CyberWorks.

David Webb, a financial analyst who uses his Internet site to act as a consumer watchdog for investors, claims the Li name has already earned a pocketful of valuable concessions and rule waivers from the GEM listing committee. In each case, GEM rules stipulate that the exchange has the flexibility to grant waivers under exceptional circumstances. However, Webb argues that he doesn't see the exceptional circumstances that prompt special treatment for Li's new company. For example, the new portal will be allowed to list additional shares within six months of initial listing, which contravenes standard GEM rules. Chang says the company needs the flexibility to use its shares in case it wants to acquire other companies. Also, management will be allowed to sell their shares after six months instead of having to hold on to them for two years, which is the standard waiting period stipulated by GEM. Finally, has received permission to award 50% of its shares to employees as stock options. The company says it needs this exemption to attract top talent to the company, but Webb argues that the waiver is an unfair advantage unless other new GEM companies get the same consideration.

Webb argues that Hong Kong investors should protest loudly against these waivers, because he thinks they ultimately hurt the credibility of the bourse with the global investing community. But here is the rub: the Hong Kongers who braved cold and rain and huge crowds to place their IPO applications with HSBC know exactly what they're getting into. They wouldn't be going to such trouble if it weren't Li Ka-shing's company. Who said life was fair?

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