The fairy tales of sky-high valuations for China internet companies at exchanges in the US seem over, yet again. Financial analyst and VC William Bao Bean expects a return to realistic valuations, in a soft landing, he tells The Australian.
Shares of online bookseller E-Commerce China Dangdang, which surged 87 per cent on their New York Stock Exchange debut in December and peaked even higher in January, fell below their IPO price for the first time last week.
Renren‘s shares jumped 29 per cent on their debut a month ago but sank back below their IPO price of $US14 the next week, and were trading at $US7.90 in New York.
And Baidu’s shares have fallen 20 per cent from a closing peak seven weeks ago, wiping out about $US10.7 billion in market value .
In roughly the same period, the Nasdaq Composite index has fallen 7.6 per cent from a closing peak in late April and China’s benchmark stock index has fallen 11.5 per cent from a closing peak that month.
“There are fewer and fewer and fewer reasons to expect any increase in the stock prices – there are fewer positive catalysts, and investors are looking for reasons to sell,” said William Bao Bean, managing director of investment at SingTel Innov8, a venture-capital unit of Singapore Telecommunications.
“I think what you’ll see is a gradual deflation. The stocks have to grow into their valuations.”
- How to get your ROI on social media – William Bao Bean (chinaherald.net)