Chinese IPOs keep their shine
Updated: 2007-10-07 10:39
Chinese companies are on track to launch a record number of IPOs in 2007 on stock exchanges across the globe.
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The pipeline to New York has been well-stocked, giving US investors new opportunities to take part in China's blistering growth.
In the US, 16 Chinese companies have launched IPOs this year, raising more than US$3 billion. At least three more are on tap. The previous US high was 11 in 2004.
Among 2007's big gainers: WuXi Pharmatech, energy firms LDK Solar, Yingli Green Energy and JA Solar; E-House and Perfect World .
Shares in China Digital TV shot up 75 percent in its debut Friday. The maker of smart cards and software that control TV access sold 12 million shares at US$16 apiece, above its already-raised price range.
So while Asian markets are hot, some Chinese companies are still taking the US route for IPOs.
"It's easy to raise money in Hong Kong and the domestic market," said Richard Gao, portfolio manager of Matthews China Fund. "Companies can just watch their valuations go up.
"But there are still a lot of companies interested in listing overseas, in New York, especially high-tech and private-sector companies."
Three more Chinese companies plan US IPOs this year: Fuqi International, Noah Education and Longtop Financial Technologies.
The New York Stock Exchange and Nasdaq have stepped up efforts to attract IPOs from Chinese companies. In September, the NYSE was the first foreign exchange to open an office in China.
"The (overseas) IPO pipeline is by no means dry. There's a lot more still to happen, especially from the private sector," said Paul Cavey, China economist at Macquarie Securities.
"On the Internet side, it's much more driven by the private sector," Cavey added. "There's a lot of competition and innovation. There are still a lot more IPOs to come."
China's leading Web search firm, Baidu.com, and online gaming firm Shanda Interactive Entertainment have been top performers since their US IPOs.
A Chinese IPO is no sure-fire winner. Several US listings are trading below their offering prices. But many have doubled or nearly tripled since their IPOs.
State-controlled companies, like banks and those involved in heavy industries, continue to go public mainly in Hong Kong.
Most big companies known to US investors, including China Mobile, China Life Insurance and PetroChina, trade in the US as ADRs but are listed in Hong Kong.
"Until recently, the only listings on the NYSE from China were ADRs from State-owned enterprises," said Donald Straszheim, vice chairman of Roth Capital Partners.
"Now you're beginning to see more (private) companies, like solar, listing on the NYSE as opposed to Nasdaq."
He added, "Most companies in China that have some sort of global vision still look very favorably on listing in New York."
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