Macro-environment unfavourable for Venture Capital industry

Downbeat exit market conditions will affect returns of venture capital companies. The gyrating stock market has put a crimp in the initial public offering (IPO) market, one of the key exit markets which the venture capital (VC) industry depends on to generate returns. On the merger & acquisition (M&A) front, established corporates are also exercising more caution in their acquisition strategies of venture-backed companies until market conditions improve. These adverse market conditions and outlook is expected to affect the returns of Hotung Investment Holdings (HIH).

Weak technology sector outlook. The economic crisis is expected to
dampen consumer spending and global growth of the technology sector.
The falling demand trend is expected to have a ripple effect on the entire food chain from the hardware makers to the component producers.

Losses expected in FY08 and FY09. The fragile global economic and
financial outlook is expected to dampen the growth prospects and outlook of start-up companies in the VC fund. As a result, NRA are expecting more provisions for impairment losses and downward revision to the fair value reserves in the course of valuation.

Fair Value US$0.050