 2009-01-03 Let's Go Skiing
Although the word of winter seems to covey anything but warmth, I believe the idea of going skiing is sure to kindle the passion within many people. Today we will talk about skiing. | |
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|  A British delegation made up of government representatives, market brokers and lawyers have come to Beijing courting Chinese enterprises to list on the UK market. This is exerting new pressure on both the Shanghai and Shenzhen stock exchanges, who are also hungry for quality firms at a time when capital is swarming into the two bourses. CRI's Wu Jia finds out who is going to win the battle.
Reporter: Lin Wenrun works at a mid-sized firm selling car decoration materials in south-east China's Fujian Province. He has come all the way to Beijing to attend the National Conference on Raising Finance and Investing in the UK.
"We are planning to float our stock on the market, because our business has been growing very fast in recent years , so we are here to see what we can get from a UK listing."
High-growth small and medium sized firms are what participants are mainly focusing on at the conference.
Henry Chiu is the greater-China manager of the London Stock Exchange's Hong Kong office.
"Investors on the AIM enjoy several preferential tax policies from the government, this helps them attract a considerable amount of capital and remain stable on the AIM. That also provides abundant funds for your companies."
The AIM, or Alternative Investment Market, is the sub-market of the London Stock Exchange. It allows smaller companies to float shares on a more flexible regulatory system than that is applicable to the Main Market.
But the flexibility doesn't mean any company is able to raise funds there. Professor Wang Tiejun from Peking University explains.
"Though there are no specific suitability criteria for companies to qualify for the AIM in terms of audited financial statements and profitability, the nominated adviser, which is required for assessing the appropriateness of an applicant, as well as the investors, would prefer that a firm is profitable when it plans on joining the AIM listing."
Currently, there are over 1,600 firms listed on the AIM, 53 of them from the Chinese mainland.
But that's obviously far from enough. Henry Chiu again.
"After being publicly traded on the domestic market, a lot of mainland firms currently also choose to float on the Hong Kong stock exchange. We hope in the near future, the mainland-listed firms will go directly to London for dual listing."
The British delegation has followed the footsteps of many other major world stock exchanges--such as the U.S. Nasdaq and the New York Stock Exchange.
Their presence has added great pressure on the domestic stock exchanges, notably the Shanghai and Shenzhen bourses.
Currently there are a little over 1,300 companies listed on the mainland's major share market, that's less than half the number on the London Stock Exchange.
As investors from both home and abroad are pouring money onto the mainland market, people are seeing the prices of an increasing number of shares go way beyond their real value, arousing concerns over amounting risks.
Mainland exchanges are hungry for quality firms to satisfy eager investors.
But the reality in an increasingly integrated market is cruel. Chen Wen, senior partner of the Beijing-based Zhonglun W&D Law Firm, explains:
"The capital market is integrated, especially at times of globalization. As China opens up to the world, its enterprises also need to go global. If we are constrained within the domestic market, the growth will be mostly limited."
The Shanghai Stock Exchange is now starting to take a proactive role in competing for enterprise resources. The exchange has reportedly held discussions with several high-profile foreign companies, including UK-based HSBC, to list shares on the mainland.
As to who may be the winner of the battle, Chen Wen has this to say:
"If a capital market provides good services, the companies will possibly go there. If the entry thresholds are high and the confinement is stringent, it may scare companies away. That's the rule."
Wu Jia, CRI news
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