"As the Internet industry continues to grow rapidly, some of these companies which I've seen will be profitable in about three years," said Alexander Mackintosh, international director for Ernst & Young's assurance and advisory business services. Analysts said the losses were largely attributed to investments in acquisitions, hiring and setting up new offices around the region.

"Asia's web firms have been investing heavily in building their businesses," said Stephen McKeever, communications and Internet research analyst at Lehman Brothers.

"Although they're posting losses right now, they'll eventually focus more on profitability as the market matures," McKeever added.

Asian Internet firms such as Pacific Internet and China.com have been in the red since they went public on Nasdaq this year. Singapore-based Pacific Internet posted a net loss of $0.56 million in its second quarter and China's web portal China.com made a $4.4-million loss in its third quarter, more than double the $1.7 million loss a year earlier.

Although US investment company Lehman Brothers projected a full year $17 million loss for China.com's in 1999, it said in a research report that the web portal firm was likely to make a profit in a few years. Analysts said investors were bullish on Internet companies despite the losses as market valuations were high and share prices were favourable.

"What applies to China.com applies to most of the companies in the Internet industry," McKeever said. "And what's happening in Asia right now is not highly unusual compared to what has happened in the US, where companies there underwent exactly the same type of trajectory," McKeever said. Internet company officials said with Hong Kong's second board imminent, Asia's web firms were expected to raise capital from Asia as well as seeking funds in the US.

"Although listing on the Nasdaq is prestigious, there are drawbacks," said China.com chief Peter Yip. "Because of the time differences, it is more difficult for us to communicate with our shareholders," he said.Hong Kong's second board would create more opportunities for China's other web portal companies such as Sina.com and Sohu.com to get listed, he said. "By being listed in Hong Kong, it's closer to home, and these are opportunities we did not have before," Yip said. McKeever disagreed.

"Hong Kong's second board would allow smaller Internet companies in Asia obtain more cash, but for companies who want to be major players in the Internet, Nasdaq is still the place to go public," he said.