‘Western concept’ Chinese shares see US resurgence
November 10, 2013 Leave a comment
‘Western concept’ Chinese shares see US resurgence
Staff Reporter
2013-11-10
Chinese companies seeking a stock listing in the US have seen a resurgence in 2013, but most US investors are not pursuing China concept shares but rather seeking Chinese companies with an “American shadow,” the Shanghai-based First Financial Daily reports. On Oct. 31, 58.com, a Chinese local classified-ad website, launched an IPO with a price of US$17, giving it a market value of more than US$1.4 billion. The company’s share price jumped 42% on debut.Qunar Cayman Islands Ltd, a travel-booking service controlled by Chinese internet search giant Baidu, jumped 89% on Nov. 1 after selling American depositary receipts at US$15 each, above an initial target of as much as US11.50.
Five Chinese firms have completed US IPOs this year, rallying an average 43%, according to data compiled by Bloomberg. Several more Chinese companies are planning to go public in the US.
The booming IPO issues are in sharp contrast to the last few years, when many Chinese companies listed in the US were hit by accounting scandals which either caused their shares to plummet or forced them to delist altogether.
As shares have kept on rising this year in the US this year, US exchanges have become the best place for Chinese firms seeking overseas IPOs. Marc Iyeki, in charge of listing at the New York Stock Exchange, said the US IPO market has been prosperous in 2013, with nine firms launching IPOs in the same week and plenty more companies expected to float in the last two months of the year.
Rather than saying China concepts shares have re-emerged to attract US investors, it’s probably better to say that US investors are betting on “Western concept shares,” referring to those Chinese companies which have copied successful business models of Western companies and become success stories in China, the report said.
For example, Baidu took Google as its model, as did Sina Weibo with Twitter, and Renren with Facebook. The latest is 58.com, which took its lead from Craigslist, CNN recently noted.
US investors prefer to buy those Chinese “mirror companies” which follow certain US business models and are not interested in buying Chinese firms with their own and unfamiliar style, said US stock expert Mark Otto.
The successful IPOs by 58.com and Qunar signaled the appetite for Chinese stocks remains unshaken by cases such as Muddy Waters’ allegations of fraud against NQ Mobile. However, insiders warned that Chinese companies must learn to make sure their integrity and corporate governance are beyond reproof, otherwise another round of shorting Chinese shares will not be long in coming.
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