Pacific Century CyberWorks, 1186, reached $20, a price that values the company at $166 billion, which is virtually the same as the capitalisation of the Hang Seng Bank, 11, and only slightly lower than Richard Li's father's company, Cheung Kong Holdings, 1, at $226 billion or Sun Hung Kai Properties, 16, at $198 billion.
This price defies any logical explanation, as this company is merely a venture capital company with stakes in various I-tech compnaies, and has nothing to produce revenue except the surplus capital on deposit and the rent from a property in China. Otherwise this is a concept stock and the trading boards of many national stock exchanges are littered with the remains of most other concept stocks which have failed to match up to expectations. Perhaps today after this outrageous excess the expectations are sufficiently high that no amount of achievement could justify them. Perhaps an exchange of shares with Hutchison Whampoa, or a takeover, could mark this level temporarily justified, but it could only defer a massive corrrection dragging its shining knights down with it.
Nevertheless turnover of $2.6 billion in CyberWorks, which raised its price level by $3.55, or 22%, to $19.50 at the close, had lifted the overall trunover to $16.7 billion, the second biggest turnover of 1999. The HSI had consequently closed at 16,928 falling slightly short of the next magic 17,000 level, after trading through a range of from 16,810 to 16,979. This was 95 points higher than the pre-Christmas all-time record high. Advances, at 358 issues, outnumbered declines, at 269 issues, whilst the outstanding open position on December futures, which closes today, was down to only 7500 contracts. The open position for January is also lower at only 30,000 open contracts.
Red-chips rose over 3%, or 46 points to 1332 with all the heavyweights, including China Resources, 291, in particular up $1.60 to $13.25. Others like Beijing Enterprises, 392, rose 80 cents to $12.75, China EB, 165, up 60 cents to $6.75, Cosco Pacific, 1199, up 60 cents to $6.80 and Shanghai Ind, 363, which rose 85 cents to $16.55. These rises may give holders some breathing space, but it would be foolhardy to expect this rally to last too long. Whilst it is not yet at a selling stage, one should be looking for such opportunities. H-shares seemed to miss out on this China wave, as the index climbed only 9 to 461. Meanwhile on the mainland A shares got a reprieve as in Shanghai they firmed up by 3 to 1433 whilst in Shenzhen they were barely changed by 1 point to 426. Turnover on the two mainland exchanges was RMB 6.2 billion.
But it was the prevalence of the tech issues which had knocked all the normal turnover leaders off the top-ten, with NWCyberbase, 276, enjoying more than one billion dollars in turnover, $1.07 billion to be precise, and the other slots being taken by Hanny Holdings, 275, $830 million in turnover, Sino-i-com, 250, at $612 million, China Online, 383, at $388 million, Star East, 198, at $371 million, G-Props, 286, at $368 million and Hing Kong Holdings, 535, at $366 million replacing all of the constituent members of the HSI except China Resources, 291, at $425 million, and once proud HSBC, 5, at $379 million.
Of these tech stocks most enjoyed double digit rises on the day. Some of these are the resurrections of previous failures in their own chosen fields who had been on the verge of bankruptcy before seeing the light and calling themselves internet plays, a label which is inexpensive and which people, gullible as they so frequently are, take at face value. Fortunately for many of these the public can be kept in the dark until 2001 when some of them may be asked to justify their new nomenclature.
The chase is now on as the punters are picking class 5 stocks in a class 5 handicap race, and this is a race where previous form can be ignored, primarily because there is an abysmal lack of any winning form, but these outsiders are expected to pay the highest dividends. However as in a horserace only the winner takes the prize, although the second and third do get on honourable mention. The rest of the runners are retired, if they are lucky, or are sent to the knackers yard to be turned into horse meat.