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Foreign venture capital institutions keep hopes up despite softness of China concept stocks


09:34, November 01, 2011

SHANGHAI, Oct. 31 (Xinhua) -- Although China concept stocks in the U.S. stock market have presented sluggish performance recently, most foreign venture capital institutions in China are still showing confidence in the investment opportunities in the country's huge market.

China concept stocks have experienced a drastic downward adjustment over the past several months amid sharp retreat on the US stock market and uncertainties in global economic prospects. Most planned initial public offerings by Chinese companies have been halted. Since the beginning of the third quarter, only one Chinese firm -- Tudou Holdings Ltd., China's second-largest online video service, launched IPO in the U.S. stock market.

Drew Bernstein, co-managing partner of Marcum Bernstein and Pinchuk (Marcum BP), a PCAOB (Public Company Accounting Oversight Board)- registered accounting firm headquartered in New York, said it was hard to say when China's concept stocks will rebound, indicating that U.S. investors still had some concerns about the credibility of Chinese enterprises.

Some Chinese companies listed on U.S. stock exchanges have faced frequent accusations of accounting fraud in recent years. Although the U.S. has not raised its threshold for listing criteria, the PCAOB has warned its auditors to watch out for companies from emerging countries like China.

More and more foreign venture capital institutions have begun to show an unprecedented aspiration for yuan-based funds. With the lure of great investment potential, these investors have chosen to adjust their investment strategies in China, including spreading to the nascent market for yuan funds, rather than closing their doors to Chinese firms.

Kang Ruoxi, Asia-Pacific CEO of ICAN Capital, a foreign venture capital institution, said that after pouring 1 billion yuan (158.7 million U.S. dollars) into the Chinese market this year, the company has planned to pay more attention to yuan fund investment.

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