"There may be some investors who believe that if the banks fall in line there is money to be made here,'' said Tiong Jin-yan, investment director at Rothschild Asset Management (Singapore) Ltd, who participated in the June sale.
"They may be willing to take a small punt, depending on their risk-reward profile." Still, the increase in the number of outstanding shares after a rights offer would dilute the value of the company's stock, fueling concern investors may end up with nothing unless they sell now.
"This business of converting debt to equity is really frightening for the existing shareholders," Mobius said.
As part of the bailout, South Korean investment trust companies are being asked to extend the maturity of about 1.2 trillion won of three-year bonds maturing since August and other lenders would extend repayment on another 500 billion won of Hynix debts.
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