China commercial credit IPO

English>>Business

Editor's Pick

By CCTV correspondent Liling Tan (CNTV) 13:11, August 22, 2013

Email|Print|Comments

twitter

facebook

Sina Microblog

A small Chinese financial company is creating a stir among some U.S. investors. China Commercial Credit, whose subsidiary underwrites microloans to small companies in China's Jiangsu province, emerged from its first week of trading on Nasdaq, up 40 percent to around nine dollars per share. Is this a sign of renewed U.S. interest in Chinese stocks, and what does it mean for China's shadow banking system?

For China Commercial Credit, this was a volatile first week that ended on a high note. Its U.S. reception when it launched August 14th was lukewarm-with the IPO raising only $8.9 million dollars.

It listed at $6.50 per share, but stocks fell two percent on Day One, then spiked and slipped before closing the week nearly 60 percent up, as the top performing stock.

Stephen Leeb, Economist, said, "This is really the first IPO that has come out under the new leadership in China, and the new leadership is very anxious to get off on a wonderful start in the US and the rest of the world, to show that Chinese companies can be transparent, can grow rapidly, can serve a public good -- in this case the public is China -- but can also make investors, whether they be US investors or foreign investors, richer."

The positive reception has surprised a few market watchers partly because China Commercial Credit, which lends to small companies and farmers in China's Jiangsu province, is part of the country's so-called "shadow banking" system, in which lenders operate without regulatory oversight.

Leeb, said, "I think the whole issue of shadow banking is so far overdone. I mean shadow banking in China is about the equivalent of investment bankers in this country. Goldman Sachs is like a shadow bank. Not every shadow bank is a bad bank.”

Reporter: “China Commercial Credit is only the second Chinese stock to list in the U.S. so far this year, after accusations of improper accounting by some Chinese companies last year provoked many U.S. investors to pull out of Chinese stocks, and likewise spurred many Chinese firms to pull out of the U.S. stock market.”

But China Commercial Credit may be a stock to watch-thanks to company Chairman Qin Huichun.

Listing on Nasdaq enables him to raise capital to underwrite more loans to small and medium-sized businesses in China where demand for credit is soaring. His bank is the first Chinese lender to raise money in a foreign market, and he also reportedly harbors designs on one day acquiring a U.S. bank.

If China Commercial Credit manages to sustain U.S. investor interest, Qin may well defy the odds, and get his way.