The market slump is taking its toll on the investments of Li Ka-shing, Lee Shau-kee, Cheng Yu-tung and their fellow Hong Kong tycoons in new share offerings - because, as cornerstone investors, they are bound by lock-up agreements to keep the shares for up to three years. The agreements mean they could not sell when the share price peaked, nor cut their losses in the past two days - which has seen their paper profits fall, or their paper losses grow, on these investments in initial public offerings. The city's three richest individuals, as well as other tycoons and corporations, have often been invited to act as cornerstone investors, which guarantees them allotments of new shares in return for agreeing not to sell them for between six months and three years. Hong Kong Exchanges and Clearing is consulting the market about whether it should curb the practice, which some say is unfair to small investors in IPOs. However, the sharp share sell-off this week shows these cornerstone investors are at a disadvantage compared with other retail investors or institutional buyers, who are free to sell their holdings at any time. Mr Lee, chairman of Henderson Land, has lost a third of his paper gains on three popular IPOs - house builder Country Garden, miner China Molybdenum, and China Railway, Asia's largest construction contractor. On Friday he was sitting on a paper gain of HK$668 million. By the end of trading yesterday, his profit had shrunk to HK$228 million as the three stocks fell 6 per cent, 24 per cent and 14 per cent respectively. The market slump has also widened his paper loss on his investment in the IPO of Fosun International - a Shanghai-based property, retail, steel and drug-making conglomerate - to HK$59.3 million, from HK$30.9 million last Friday; the stock price has fallen 23 per cent in the past two trading days. Mr Li, chairman of Cheung Kong (Holdings), has seen the paper profit on his investment in the China Molybdenum IPO shrink by HK$72.2 million in the past two days as the stock price has dropped from HK$12.90 on Friday to HK$9.75 yesterday. Mr Li, like Mr Lee, saw his paper loss on Fosun International double; he also acted as a cornerstone investor when it went public last year. Mr Cheng, the chairman of New World Development, has seen his paper profit on cornerstone investments in Country Garden and China Molybdenum shrink by HK$154 million over the past two days. Joseph Tong Tang, executive director of Sun Hung Kai Financial, said it was not right to think that cornerstone investors could always make a profit because they were bound by the lock-up period. 'The lock-up period ensures these investors are staying for the longer term. 'They may not always make a profit as the market may have changed a lot by the time the lock-up period expires,' Mr Tong said.