MAYBE it is hard to have much sympathy. So what if Li Ka-shing's personal wealth has been slashed, Henderson chairman Lee Shau-kee has been toppled from his ranking in Forbes magazine's list of richest men, and even the Government - one of the world's richest - has seen its cash pile shaved following its dalliance on the stock market? Unfortunately, there are ramifications from these paper losses for smaller investors. Lower share prices and a subdued stock market make it difficult to raise fresh equity (witness the thin number of initial public offerings this year), making expansion a problem.
In today's market, this is exacerbated by the credit crunch: fewer banks are lending than ever (syndicated lending this year is expected to be less than one-third of last year's US$156 billion).
Companies that do well out of this scenario are those which are cash rich. For the rest, more desperate measures are called for: raising costlier bank loans (such as Wharf), or selling down property developments earmarked for rent in order to boost cash flow (Sino Land).
If companies find it difficult, or expensive, to grow, they may choose to batten down the hatches. This means earnings growth is unlikely, and makes the company's shares even less attractive.
In Hong Kong, this is a 'double-whammy' for share investors. British and United States companies, wary of the legions of mutual fund holders, are loathe to cut dividends. This means even when earnings fall, they will try to hold or even lift dividends - as did, for example, London-listed HSBC Holdings.
The bank's example is not one that has been widely copied: Cheung Kong, Hutchison Whampoa, Swire Pacific and Cathay Pacific all cut their dividend payouts at the interim stage this year.
