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Monday, August 08, 2005

Like in the old days: shares going through the roof

This is like in the old days. Be an internet company and go public - sure, your shareprice will grow dramatically.

I am talking about Baidu, the Chinese company which went public on Friday. Their shareprice grew a dramatic 354% from a initiatl price of US$27 to hit a high of US$151.21.

There is the relation to Google of course, whose shares keep rocking the boat - this excited investors who wish the good old days would come back.

The scary part for the small time investor is that Baidu is already been sued for their available downloads on their websites.

The pitiful part is that investment banks estimated the pricing wrongly - this means that a lot of money that rightfully belongs to Baidu (generated through the gap between the initial and the final price) doesn't end up in their account. But goes to those who were able to get the shares at the initial price - the investment bankers, for example.

I could make a guess of what might happen. I believe the price won't stay high. But I also believe that Google, who has a share in Baidu, will make a bit for it, not now, but later, when the market in China opens some more, and Baidu can be rebranded as Google. This is speculation, of course, and no investment advice.

(By Asia Business Consulting)