Business Comment: Look out for the South China Sea Bubble
Thursday 29 May 1997
The latest manifestation of this hysteria is the public offering of shares in Beijing Enterprises Holdings which closed yesterday 1,276 times oversubscribed. Put another way that amounts to pounds 19bn of cash chasing pounds 148m worth of shares.
When dealings start today the shares are expected to race to three times their issue price fuelled by the acute shortage of stock and the savage scaling down of applications.
For all that, Beijing Enterprises, the latest "red chip" to come to market, still amounts to a massive speculative punt.
The company has little in the way of assets and even less in the way of contracts but boy, when China opens up its markets, Beijing Enterprises will be the business to have your money in. Just consider its impeccable political credentials, being the financial arm of the Beijing local authority.
The parallels with the company that gave its name to the original South Sea Bubble are interesting.
That too was floated on a tidal wave of expectation - in its case that slave trading would be massively extended.
It too had impeccable political credentials - George I agreed to become its Governor and handed over a large chunk of the national debt to its safekeeping. It too sucked in thousands of investors. The rest is history.
The only sure-fire winners from the flotation of Beijing Enterprises are its sponsors, led by Morgan Stanley Asia, and the company itself, which will probably make as much on overnight deposit as the entire offer will raise in new capital.
The other sure-fire winners are those who can get their money out before Beijing Enterprises suffers the same fate as Denway, another red chip which floated a modest 658 times oversubscribed and soared briefly only to fall to earth with a bump.
With unintended irony, investors who miss out on Beijing Enterprises have been told to pick up their refund cheques at the Museum of Chinese Historical Relics. Maybe that will also become the resting place one day for the share certificates.
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Chris Moyles reportedly set to make radio comeback with new breakfast show on XFM
- 4 The Greece debt crisis explained in less than 100 words
- 5 Cristiano Ronaldo storms out of interview after being asked about possible sale of Manchester United target Sergio Ramos
Hilary Swank: Million Dollar Baby star says she turns down roles to care for elderly father
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
The Greece debt crisis explained in less than 100 words
Bastrop: The Texas town where many fear a large military training exercise will be used by President Obama to take their guns and impose martial law
Bakery sends 'horrific' version of Frozen-themed birthday cake to unsuspecting customer
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...