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A Grand Beginning for Chinese Business

6 November 2006 - Features - Editor

The stock market world has not been kind to the Chinese banking industry. Rumors circulate about interference from the military regime in forcing lending to public companies, and to ventures in which returns are doubtful. International stock market analysts have incomplete information about operational conventions and staffing patterns in the Chinese banking system, though Hong Kong’s credential in this respect need no introduction. The Hong Kong stock market has a natural advantage in terms of providing financial and management support to major Chinese enterprises.

This is why the effort of the China Merchants Bank (CMB) to attract public funds has been such a spectacular success in Hong Kong. The bank has listed on the local stock market with a capital of almost $2.5 billion. The CMB is a pioneer, and other banks should follow soon. A string of initial public offers are planned for the Hong Kong stock market. There is tremendous excitement in the Hong Kong stock market over these prospects.

Hong Kong as a small territory has unlimited interest in the mainland, and the stock market sentiment in favor of investing in Chinese organizations is not borne out of any political servility! The commercial acumen and international façade of Hong Kong is a most suitable foil for the romance of doing gigantic business in China!

Chinese companies have also been nimble in learning the ways of the Hong Kong stock market, and many of them earmark private placements with top investors in the territory. This practice fuels even greater retail investor enthusiasm for new offers and listings, as there is often a double digit rise in valuations over a single trading day!

The growing investment links between the mainland and the territory have a number of spin-off benefits as well. Chinese companies need help, for example, to bring their accounting and disclosure norms up to global standards, and this applies to a number of other functional areas also. The Hong Kong expertise in this regard should blend with the mainland’s boundless potential to make for a winning opportunity!

 


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