Saturday, September 29, 2012

Listing And Trading Your Company's Shares In CHINA!

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It was inevitable that companies from the industrialized nations would migrate to the Chinese Securities Exchange. The reasons are quite pragmatic, and here's what I believe them to be:

1) The other exchanges are extremely volatile;

2) The other exchanges are quite obviously not well-regulated, and may be subject to suspension of trading and other horrific occurrences for any company whose shares are traded there;

3) The United States Dollar is declining in terms of its relative purchasing power and in therms of its value when paired against other currencies;

4) China's population has a far greater investable income (both individually and corporately) than that of these other traumatized nations;

5) Listing on the Chinese Exchange creates a natural opening for easier access to Chinese consumer markets as well as Chinese manufacturing and outsourcing facilities;

6) Some listed firms want to avoid potentially overly-zealous regulators and prosecutors who are swimming around the US exchanges like impatient and starved piranhas;

7) Significant (albeit quiet) Chinese strategic investment in blocks of shares in the companies of a number of industrialized nations makes this migration a logical move from both a  jurisdictional and a logistical standpoint.

An article excerpt from The Wall Street Journal (courtesy of SmartBrief newsletters) follows for you to quickly review: 
International firms prepare for prospect of listing in China
More than 300 international companies reportedly are in line for stock listings in China, a possibility that appears a likelihood in the coming year as China opens markets and transitions leadership. HSBC Holdings is among those seeking entry, and some companies have signed on bankers to deal with the listing process. The Wall Street Journal/China Real Time Report blog (9/18)


One should bear in mind that China is experiencing its own share of domestic and international trauma, and it might not be quite the trading Mecca that many listed firms had hoped and prayed for, but despite this, the alternative of  staying in a trading market that is subject to constant shocks as financial institutions disclose more and more disappointing news regarding their practices and losses almost daily is not very appealing.

In fact, a number of publicly-traded firms in the USA are going private in order for the majority stakeholders to have direct access to cash flow and profits and less dependency on the value assigned to their companies' shares assigned to them by the domestic exchanges.

Expect this "going private" trend to continue in the western industrialized nations, and expect listing activity by western firms in China to decline during the course of these next several months.

Douglas E Castle for The Internationalist Page Blog, The Global Futurist Blog, The Sending Signals Blog and The Daily Burst Of Brilliance Blog

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