PEREGRINE Investments: niche China player or regional force? Chairman Philip Tose has no doubt Peregrine will spread its wings further in Asia, following several years of rapid development in the territory and on the mainland. At present, 70 per cent of Peregrine's income is attributed to China and Hong Kong with the remainder to the region. But Peregrine planned for at least half of the company's business to come from outside China and Hong Kong, according to Mr Tose. ''A year ago, China and Hong Kong were the dominant part of our business. It is still our dominant part. But we are trying to build up the income base of the group outside of Hong Kong and China. So we have a more evenly spread business,'' he said. ''You don't want to put all your eggs in one basket. For sure, there will be a time when things in Hong Kong will slow down for whatever reasons. Things will be back to India, Korea, or somewhere else for a short period of time. So you have to have a diversified income. Otherwise you end up with serious problems.'' Since it was founded in 1988, Peregrine has set the local investment banking world alight with deals that have included advising CITIC Hong Kong during its takeover of listed company Tylfull and its later injection of assets including a stake in Cathay Pacific. It has also cut some smart deals for itself and, in the space of five years, has seen net tangible assets rise from $1.2 billion in 1988 to $3.5 billion in 1992. However, a recent article in the Asian Wall Street Journal that raised questions over whether the investment house would successfully make the leap from the local stage to the international stage riled the Peregrine chairman. ''Some of the same traditions that made Peregrine a local star are making it difficult for the firm to become a major international player,'' the newspaper reported. In reply, Mr Tose points to ''very significant business overseas''. ''We are very successful in Indonesia, particularly in the merchant banking area. We are successful in Korea, in the Philippines. So our overseas businesses are building up significantly. Then we will have the 50-50 split.'' Peregrine may open offices in Tokyo and Taiwan next year while 14 offices in the region, New York, London and Brisbane have been established in recent years. The company's new business approach appears to be the second phase of Peregrine's development plan. Mr Tose said that being a regional player had been a long-term strategy. He said Peregrine had been focusing on the territory and China because ''we have to make money, then spend the money to diversify''. Last year, the Hong Kong-based merchant banker accounted for 16 per cent of all the capital raised on Hong Kong's stock market, according to the Asian Wall Street Journal. ''Peregrine has been an aggressive and successful brokerage house in Hong Kong. But if it wants to develop its business overseas, it better link up with other major merchant bankers,'' said a foreign broker based in Hong Kong. Peregrine's development will focus on corporate finances, merchant banking and brokerages. It will continue to be active in direct investments. At present, 20 to 25 per cent of income is attributed to the direct investment business. Peregrine has taken a stake in a number of companies with which it has been involved, including Denway Investment and Stone Electronic Technology. One new area of activity is likely to be the region's fast emerging debt markets. The company has already been highly involved in the convertibles market. ''If these convertibles hadn't been done a lot of that fund raising would have been done through the equity market itself and would have dampened the market,'' he said. ''I think probably we will be in the debt market in one way or another. I think that is going to grow. ''There are going to be a lot of opportunities for direct investments in the region as a whole, particularly some of the more emerging economies. ''But whether that takes place through dedicated infrastructure funds, or country funds or industry specific funds, it is difficult to say. I think there will be some big opportunities.'' Peregrine has been actively involved in the H-share market - state-owned companies set to list in Hong Kong stock market. It was the main sponsor of Shanghai Petrochemical, the second H-share, which launched a listing in Hong Kong and overseas in July. The $2.9 billion issue met a cool response and struggled to be fully subscribed. However, Mr Tose said Peregrine would continue to put resources in China and have keen interest in other H-share issues. At present, it has four offices in China. It plans to open three more next year, though details have yet to be finalised. Despite the near record level of the Hang Seng Index Mr Tose remains a raging bull on the Hong Kong market, believing present price/earnings ratios to be comparatively cheap. ''Why should this market trade at a discount to Thailand or the Philippines or Singapore? There is no reason whatsoever, none. I have said for years that I believe by 1997 the Hong Kong market will be at a premium to the region. ''Are the political risks here more than in Thailand and the Philippines? I don't think so. At the end of the day Hong Kong is part of China, whether we like it, whether the British likes it, whether the Hong Kong people like it, whatever. It is part of China, full stop. If you don't like that idea, well pack up and go.''