A Red Flag For Red Chip Stocks
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Just five months ago, Hong Kong investors stood in line to buy into the latest hot "red-chip" stock offering--a sale of shares in Beijing Enterprises Holdings Ltd.
Amid hopes that China's capital city would soon sell the conglomerate choice municipal assets at bargain prices, Beijing Enterprises' shares soared. But the sales haven't materialized--and the investment climate in Hong Kong has soured quickly as Southeast Asia's financial crisis has deepened. All of a sudden, the red-chip bulls have become raging bears. Since its August high of $8.20, Beijing Enterprises' stock price has plummeted 60%.