Chinese firms head for U.S. despite Beijing/Washington dispute
According to Reuters, about 30 firms could list in the US this year, the figures are the biggest since 2010, despite there being an issue between Beijing and Washington.
The country's online transaction volume jumped 42% last year to $305 billion and is expected to almost double in size by 2016, interest is trumping accounting irregularities and corporate governance concerns that forced many U.S.-listed Chinese firms to be delisted since 2011.
The U.S. market offers Chinese companies options not available in Hong Kong, such as dual-class structures and the ability to list without having turned a profit.
It also offers far more liquidity than the newly reopened mainland China IPO market.
Thomson Reuters data states that while only eight Chinese companies listed in the US last year, the returns have seen more than 140 Chinese companies to have raised $36.6 billion through U.S. IPOs since 2000.
"The last companies that went public, proved that there's a lot of growth still here," David Chao, co-founder of DCM, which has invested in several U.S. listed Chinese companies told the publication.
Past misdeeds still fresh in minds...
According to John Hempton, chief investment officer of Sydney-based Bronte Capital, the lack of penalties for Chinese firms' past misdeeds in the '2011 scandals' meant the potential to find accounting fraud was always there.
The scandals Hempton speaks of sparked high tension between regulators of both countries regarding the oversight of auditors and access to company information that has continued ever since.
It was only a matter of weeks ago that a U.S. Securities and Exchange Commission (SEC) judge recommended banning Chinese units of the Big Four accounting firms from auditing U.S.-listed companies.
But Reuters reckons the two sides could be close to a deal that would allow Washington to inspect the audit work of accounting firms in China, which could go a long away to alleviating strains.
