Incredible record of PCCW bidder

In a perfectly efficient market, every available piece of information should be factored into the price of an asset. Well, Hong Kong's stock exchange is not perfectly efficient, but everything you need to know about the latest takeover bid for PCCW was visible yesterday in the company's share price.

Despite being on the receiving end of a bid valuing the company's shares at a 23.7 per cent premium to Tuesday's closing price, PCCW's stock only rose by 4.7 per cent.

That performance looks even poorer considering that the Hang Seng Index shot up by 3.98 per cent yesterday.

In other words, PCCW shares barely rose in response to the takeover bid, which goes to prove just how fishy investors think it smells.

Their scepticism is justified. For one thing, the bidder, Nelson Wong Kam-fu, is not exactly a household name, despite his colourful business record and somewhat dubious status as 'Hong Kong's Thomas Edison.'

For another, few investors will have heard of the company he chairs, Smart Rich Energy Finance (Holdings). It is a small company whose major assets include a minor stake in an oil-and-gas exploration permit in Madagascar's Mahajanga basin; a region that so far has yielded nothing more geologically interesting than a handful of hitherto unknown species of fossilised snail dating from the early Cretaceous period, around 100 million years ago.