Going To Europe?

China's concept stocks thrive in Wall Street, but the good news has not lasted for long.

Can Europe, another developed market, become another stage for Chinese companies to go public?

Once upon a time, China's concept stocks were thriving in Wall Street, but the good news did not last long enough to get bogged down in financial fraud.

The doubts about the spread of the market have made Wall Street determined to thoroughly investigate the financial loopholes of many Chinese stocks, and speculators have also taken the opportunity to empty Chinese stocks.

This unprecedented crisis has made Chinese companies eager to list in the us become cautious. In July, none of the Chinese companies went public in the US. Many listed companies in the US also postponed the IPO plan.

In recent years, listing in Hong Kong and listing in the United States has become a popular choice for Chinese companies to list overseas, but Europe, which is also a developed capital market, seems to have been intentionally or unconsciously forgotten.

Unveil the European market veil

Data from the Beijing Representative Office of the London Stock Exchange showed that between March 1997 and May 2011, a total of 49 Chinese enterprises were listed on the LSE, of which 8 companies landed on their main board, including China Petroleum Chemical Co, China International Uni Airways Corporation, Datang International Limited by Share Ltd and other famous enterprises.

As for the high value-added board (AIM), most of them are small and medium-sized enterprises. As of the end of May, two Chinese enterprises were listed on AIM, namely the March rig rig rig and the Guangdong Zhongke Tianyuan new energy technology company, which was listed in May.

Yao Cong, general manager of Germany's Skillnet Management Consulting Co., Ltd., general manager of Greater China, said in a media interview that at present, 35 Chinese companies have landed on Deutsche bourse, 8 of which are listed in the advanced market, 1 in the general market, 7 in the primary market, and 19 in the access market.

When China's US listed companies fell collectively, Chinese companies listed in Europe were not affected.

The APAIM China Index, introduced by investment bank's El & Co. investment company, showed that the index rose by 0.41% in May when Chinese concept stocks experienced a cold spell in the US.

The index covers 19 Chinese companies listed on AIM, with a 100 base point in January 31, 2006, and has risen to 351.88 points as of May 31st this year.

According to the relevant people of the LSE, this is partly due to the sponsor system implemented by AIM.

Sponsors help enterprises to go public, and they are responsible for the whole company's governance. If a company's performance is not good, or if it does not meet the relevant requirements, sponsors can choose to be divorced from the listed company.

At the same time, the sponsor applies a lifelong system. If sponsors violate the rules, they will also be punished.

Once flourishing

In fact, compared with today's relatively low key, Europe 5 years ago

Cui Yu, a consultant at IPO, a consultant at CIC, told reporters that since 2006, the path of Chinese enterprises going to Europe has gradually expanded. Due to the generally low restrictions on the scale of assets of Listed Companies in European exchanges, many small and medium-sized enterprises with high growth in China have been listed in Europe, like 26 Chinese enterprises listed on the stock exchange in 2006.

There is a special background: the implementation of the Sarbanes Oxley act made the threshold for Chinese enterprises listed on NASDAQ more stringent.

According to the 404th provision of the act, since November 15, 2004, listed companies with a market capitalization of more than $75 million will face new year-end financial reporting and quarterly financial reporting requirements (small businesses have been implemented since July 15, 2007).

Another reason is that the listing system in AIM (LSE) is relatively simple.

Insiders say that the AIM listing system has only 43 pages, and the official system includes 27 chapters and 13 forms.

The approval process does not require enterprises to have paction records and do not require minimum market capital, nor does it require any free circulation of shares.

After listing, the AIM listing system has low requirements for the company's continuous disclosure and reporting.

Each company is assigned a consultant to ensure that the company follows the AIM listing rules in the IPO process or after the completion of the listing.

As a result, China's fast-growing enterprises have made significant changes in the choice of overseas markets. AIM, the gem set up by the London Stock Exchange, has become the preferred choice for Chinese enterprises to list overseas.

However, it did not last long. The 26 China listed on the LSE in 2006.

Can we have another climax?

Wang Jianhui, director of Southwest Securities Research Institute, and the United States

In 2010, in order to obtain more liquidity, the listed companies such as AIM, Asia fruit industry, Western China cement and so on were listed in Hongkong and Singapore for the two time.

After the two listing of the Hongkong stock exchange, the share price of Hong Ba digital has more than doubled, and its turnover is more than 8 times that of AIM. The price earnings ratio of cement in Western China has remained around 5 times.

The 8 Chinese cement companies listed on the Hongkong stock exchange are between 10 times and 15 times earnings.

"European investors are relatively rational and the market is less active. If there is no company's profitability, investors will not buy it."

In Wang Jianhui's view, the recent M & A rumors coming from the LSE and the German exchange are the lack of endogenous motivation in the European market.

Amid the repeated accusations of China's concept stocks in the US market, whether Chinese enterprises have ever reached a climax in the European capital market? Statistics show that this year, the number of Chinese enterprises listed in Germany has been increasing. During the year, there were 13 companies in the German Stock Exchange's senior market, of which 4 were Chinese enterprises.

Insiders say that in terms of cost, the IPO cost of Chinese enterprises in the US market is 3% higher than that of the stock exchange.

Although the company still has maintenance costs every year after its listing in the UK, the expenditure is still lower than that of the NYSE and NASDAQ.

Despite the cost advantage, Li Yingming believes that the ability of Chinese companies to enter Europe in large quantities depends on the promotion of European stock exchanges in China.

At present, both the LSE and the German exchange have set up a representative office in China to attract growing Chinese companies to list in Europe.

"A good stage needs to attract good actors, believing that the European market will not miss China's opportunities."

Li Yingming said.