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Q: Well, a mild vengeance.
A: All right, mild vengeance. But I'm not sure the tech party's over, to be honest. Yes, there's been a lot of spotlight on some Old Economy names this week but locally, if you look at the reasons why, it's largely because they're companies that have learned to capitalize on the Internet. Li and Fung (a trading company) estimates that the top-line contribution from Lifung.com will, by 2003, be equal to the top-line contribution from their existing core business. Hutchison rolls out Portsnportals.com--now they're really taking the meat and potatoes of their business online, although Hutch is a few percentage points off its high this week.

Q: And let us not forget Van Shung Chong steel, which after months of languishing in single-digit PE ratio, HK$1.50 to $2.00 (20-25 cents) territory, has in the past few weeks experienced a healthy run-up on its imminent Internet spin-off.
A: Right, but buying VSC is a no-brainer because when iSteelasia.com lists on the Growth Enterprise Market [Hong Kong's second board] this month, shareholders of VSC will be entitled to 1,670 shares of iSteelasia.com for every 2,000 shares of VSC.

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(Note to readers: iSteelAsia is a pan-Asian steel marketplace. CEO Andrew Yau said he got the inspiration for the B2B site whilst in New York last year, when he read an article saying that the valuation of Priceline.com had surpassed that of the entire American airline industry altogether. So I thought, 'What is worth more? The materials themselves or the platform by which you handle the trading and transactions of the materials from one place to the other?' Andrew, who chairs the Hong Kong Harvard club in his spare time, decided the platform was the way to go. He also decided it would behoove him to hold lavish weekly lunches at the China Club and the Shangri-La and invite journalists to come chat and schmooze. Neither strategy has hurt my opinion of him or the company.)

Q: I wonder if you'll be able to convert the shares back once the NASDAQ crashes?
A: Look, there's just too much liquidity in Asia for the party to be over. Of course, a lot of the companies really getting killed this week are second-liners and pretty trashy and didn't deserve to go public in the first place. But for the companies like Legend and Computer & Technologies and, for the speculative investor Soundwill, I think there's just too much liquidity in Asia for this malaise that we're seeing to last.

Q: Okay, any opinion on Sina.com? Big spenders, big management angst, biggest portal in China. Do you buy it?
A: I honestly am not excited by the Hongkong.com's or the Tom.com's of the world, but obviously if you're the biggest player in the market you're going to trade at a healthy premium. But those are generally the names I would be trading out of right now, and they've got a long way to go. At one point, Tom.com was trading at a ratio of market cap to unique users that was seven times that of Yahoo. And that was going strictly by the numbers that Tom.com itself reported. That is positively ridiculous.

Q: All right then, back to a space you like a little better, B2B enabling. What about iMerchants?
A: We like iMerchants, but it's pricey compared to U.S. web enablers. Now, given the manpower shortage that exists in Asia you have to expect that there will be a degree of premium put on these companies because if there isn't, there will be a takeover in the making.

Q: Okay, Softbank and Hikari Tsushin have both taken a well-documented, well-publicized beating at home and by the transitive property their Hong Kong-listed vehicles, Cheung Wah and Golden Power, have suffered. Both are trading at a third of their highs, but it seems less likely that they'll rebound because they are backdoor listings with no real assets yet. Do you think this will discourage investors from going for brand-name backdoor listings like Cheung Wah, Golden Power, Harbour Ring and the Koo's Group's new vehicle?
A: Well, Golden Power and Cheung Wah both got well ahead of themselves and I don't see things looking too rosy for Cheung Wah because of an agreement Softbank made with the listing committee of the Hong Kong Stock Exchange not to inject any assets for a year. But I don't think it's going to really discourage backdoor listings. Obviously investors buying something like a Cheung Wah or a Golden Power are buying into those companies because the management team has already proven itself and the strategy is sound. But neither one has spent that much money, so it's natural for the share price to react to the lack of news.

Q: Anything else you're touting lately?
A: Group sex.

Q: Excuse me?
A: Yeah, a consumer electronics manufacturer called Group Sense, which up until now has made most of its money manufacturing electronic dictionaries, just received an investment from New World Infrastructure, which took a 5% stake, and we see the pair becoming major players in the personal digital assistant/two-way paging market on the mainland. Paul Snelgrove, ABN's hardware analyst, came away from a meeting with the company today really impressed by working models of the company's Chinese-language PDA's and pagers. And they've also entered into an Asian venture capital consortium that plans to invest in mobile data technologies.

Q: Makes sense to me.

Be it overvalued tech stocks, high-profile mergers or corruption scandals, the region's stock markets can go on wild rides. Join the discussion here

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