For many years, China’s emerging companies, especially those in the internet sector, have relied on foreign capital. Alibaba and Tencent were nurtured by overseas venture capital, and were eventually listed abroad. These two companies have today become world-class giants. The market value of Alibaba was $495 billion as of late May, while Tencent’s valuation was $605 billion. This puts them among the world’s top 10 most valuable companies. The success of China’s leading tech companies is an understandable source of pride to many in China. But for China’s policymakers, a question presents itself: why do so many outstanding Chinese companies end up going public overseas?
Public companies are becoming rarer these days. In the US, for example, the overall number of listed firms has fallen by almost half since 2000. Global M&A could be one reason for this, because being a big firm is very important for many industries and getting internal growth is more difficult than associating with a big company. Meanwhile, stricter rules for public offerings also discourages IPOs these days and the rise of active investors has made venture capital big enough to support unicorns. How will corporate ownership evolve from here? What impact will this trend leave on the economy and society?
China’s stock market crash left a host of casualties in its wake—from a weakened renminbi to plummeting commodity prices.
This week, trading on the Shanghai Stock Exchange exceeded RMB 1 trillion causing a major software glitch; China’s factory activity slowed (again); and Visa and MasterCard finally got a level playing field.
This week, CEO Wang Jianlin missed the opportunity to become the richest man in China when the much awaited Dalian Wanda IPO turned out to be a damp squib and Xiaomi was valued at $45 billion, way higher than Uber.
Michael Brennan, a renowned academic in finance, on the variable interest entity structure, China’s capital markets and the internationalization of the renminbi.
This week, figures from the HSBC/Markit PMI implied that the Chinese economy might finally be on the path to the much-need structural change; local government financing got a new breather; and Baidu launched its Google Glass competitor, Baidu Eye. The Broader Picture Last week, a flash Purchasing Manager Index (PMI) reading from HSBC and Markit […]