Hong Kong biotech stocks on the rise


Hong Kong tycoon Li Ka-shing

From Lisa Barron
CNN Correspondent

HONG KONG, China (CNN) -- Investors lined up for hours to apply for shares when Hong Kong tycoon Li Ka-shing listed Internet portal tom.com in 2000.

Now Hong Kong's richest man is fuelling the latest craze -- biotechnology stocks -- with the upcoming listing of Cheung Kong's CK Life Sciences.

"When tom.com came to the market," recalls Ben Kwong of KGI Asia, "it stirred a lot of interest in related concept stocks, so I think this will happen again, but of course at a relatively smaller scale."

A mini-boom has already developed, with a host of Hong Kong businesses reinventing themselves to cash in.

China Apollo changed its name this month -- to Maxx Bioscience Holdings -- and is moving from health foods into pharmaceuticals.

Its share price soared 20 percent on the news, and is now trading at a historic high of 37 Hong Kong cents, up from 26 cents two weeks ago.

But the jury is still out on whether such a transformation will work.

"If you're an emerging biotech company trying to develop new drug, new services, or new technology," says investment advisor Norman Chan of Allen Perkins, "the company's success depends a lot on research and development.

"And no matter how much money you put in, you cannot guarantee success."

Analysts also warn against marginal players -- where little has changed except the name.

"I think most of the companies will try to package or claim they are a biotech company before the listing of CK Life Science," says KGI's Kowng, "because they want to get in the same train but of course investors have to consider the real underlying business of what we call a biotech company, as nowadays there are very few in the market."

Biotech may be the flavor of the month but analysts suggest cautious investors should remember the dotcom daze and advise caveat emptor.