Chinese Firms Urged to Increase Communication with World Capital Market

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Last updated at: (Beijing Time) Tuesday, November 19, 2002

Chinese Firms Urged to Increase Communication with World Capital Market

Dozens of renowned foreign and Chinese experts gathered Monday in Nanjing at the first World Capital Forum to discuss China's entry into the global capital market.

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World Capital Forum 2002 Opens in Nanjing

Dozens of renowned foreign and Chinese experts gathered Monday in Nanjing at the first World Capital Forum to discuss China's entry into the global capital market.

"The lack of mutual understanding is the biggest problem the Chinese capital faces in entering the world capital market," said Michael D. Donahue, chairman of US-Asia Capital Association.

American analysts have little access to China's companies since only a few Chinese companies are listed in America, he said. "Without an analyst covering your stock, it is very difficult to get institutional investors to buy your stock."

He urged Chinese companies to increase communication with the US stock markets. "The Chinese company with no operations in the United States will need an adequate program for communicating to the US capital markets in order to obtain market support for its stock in the United States."

How to comply with the international regulations is also a problem Chinese companies have to deal with in entering the world capital market.

Mr. Hilton L. Root, former senior counselor of the US Treasury Department, considered evaluation a major barrier for Chinese enterprises to get listed abroad.

Chinese enterprises must let the Americans know their capital basis, product and prospects beforehand, which depends to a great extent on the communications between the Chinese enterprises and the global markets, he said.

Root said China's entry into the World Trade Organization will accelerate the process of its capital entering the global markets and will also make communication very urgent.

China's capital market set its feet in the late 1970s and Chinese enterprises entered the world bonds market in the early 1980s. The B shares, originating in 1992 and reserved for overseas investors only, made it possible for domestic enterprises to issue stocks in foreign currencies while getting domestically listed.

Since 1993, enterprises in the Chinese mainland have begun to get listed in Hong Kong and other foreign stock markets. As of the end of August 2002, more than 110 companies were listed on the B-share market, raising 32.5 billion US dollars; and 64 domestic corporations were listed themselves on the Hong Kong market, raising 18.5 US dollars.

The first World Capital Forum, aimed at promoting the overseas listing of Chinese enterprises, attracted nearly 80 foreign experts including Steve Forbes, president and CEO of Forbes Inc. and John Sibert, founding chairman of the National Association of Seed & Venture Funds.

Yu Xiaosong, president of the China Council for the Promotion of International Trade, and Liu Hongru, chairman of the China Capital Market Association and the first chairman of the China Securities Regulatory Commission, also attended the forum.

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