China takes Wall Street bull by the horns<\/p>\n
Steve James, Reuters, New York<\/p>\n
Call it the new \"China Syndrome.\"<\/p>\n
The Peoples' Republic is 'de rigueur' on Wall Street this week
\n-- a visit to the floor of the New York Stock Exchange by Premier
\nWen Jiabao on Monday, two hot initial public offerings grabbing
\nall the attention of investors, and the purchase of a firm
\nfoothold on the Street by Xinhua news agency.<\/p>\n
On Tuesday a Shanghai-based hotel and airline booking company,
\nCtrip.com International, saw its share price double during its
\nfirst day of trading on the NYSE, while investors are bracing for
\none of the biggest IPOs of the year -- the China Life Insurance
\noffering. This US$2.6 billion deal is<\/p>\n
expected to price late on Thursday and start trading next
\nweek.<\/p>\n
Xinhua Financial Network Ltd., a news agency part-owned by the
\nChinese government, said on Tuesday it will buy U.S. financial
\nnews service Market News International Inc., based in New York.<\/p>\n
Unlike the 1979 movie in which scientists feared a U.S.
\nnuclear plant meltdown would bore through the Earth to the other
\nside, the new \"China Syndrome\" has U.S. investors salivating at
\nan expected flood of Chinese IPOs coming in the opposite
\ndirection.<\/p>\n
\"The economy is right, there (in China), to do these deals,\"
\nsaid Sal Morreale, who tracks IPOs for Cantor Fitzgerald in Los
\nAngeles. \"Ctrip turned from being very lukewarm to being
\noversubscribed.<\/p>\n
\"Look at (Chinese Internet media firm) Sina, it has done well;
\nInternet companies have done well, China Life is in great shape.<\/p>\n
\"It's sort of like a new frontier,\" said Morreale. \"These two
\ndeals show the tremendous potential (of Chinese IPOs).\"<\/p>\n
In October, Sina posted a record quarterly profit and
\npredicted strong revenue growth would continue next year as it
\nraised its advertising rates up to 30 percent.<\/p>\n
\"Investors should keep an eye on what is happening in China
\ndeals,\" said Morreale.<\/p>\n
Francis Gaskins of IPO Desktop.com in Los Angeles said there
\nhad been two key improvements in the last three years that
\naccount for an increase in Chinese companies going public in the
\nUnited States.<\/p>\n
Before 2000, despite strong economic growth in the Guangdong
\nprovince near Hong Kong, it was not evident to investors in the
\nresults of companies thinking of doing IPOs.<\/p>\n
\"(But) There's a first-come, first-served attitude in the U.S.
\nwhere everyone wants to be first, and Ctrip showed that Chinese
\nfirms now have that (competitive attitude),\" he said.<\/p>\n
Also, in the past there were no communications with Chinese
\nfirms. \"You couldn't get through to them, and their accounting
\nwas suspect.<\/p>\n
\"But in the last three years they've cleaned it up, you can
\ntalk to representatives in the United States and there are
\ncompanies making money and going to the (public) market.<\/p>\n
\"I think you will see more and it will be fast-growing, as
\nlong as they keep their exchange rate undervalued,\" said Gaskins.<\/p>\n
As Beijing took baby steps toward a free market, Chinese
\nofferings started to trickle in to the U.S. securities markets in
\n1996, starting with Guangshen Railway which offered American
\nDepositary Shares at $19 each.<\/p>\n
Between 1996 and 2002, there were 28 China-based IPOs in the
\nUnited States, not including Hong Kong or Taiwan-based companies.
\nAccording to the IPO monitor 123jump.com, six Chinese IPOs have
\nmore than doubled in price since going public.<\/p>\n
Aluminum Corp. of China was priced at $17.69 on Dec. 5, 2001,
\nand is now trading at over $65 -- nearly quadruple its IPO price.
\nNetease.com is up over 167 percent on the Nasdaq over its IPO
\nprice of $15.50 on June 9, 2000. And CNOOC was priced at $15.40 a
\nshare on Feb. 2, 2001, and is now trading at nearly $44 on the
\nNew York Stock Exchange.<\/p>\n
John Fitzgibbon, editor of 123jump.com, was a little less
\nenthusiastic about talk of a Chinese IPO surge.<\/p>\n
\"Chinese deals on the New York exchanges have done well but as
\nfor future Chinese deals? It's speculation, there's a lot of
\nchatter.<\/p>\n
\"But there is a tendency that it (China Life IPO) will get
\nthings rolling.\"<\/p>",
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