Sharing his positive views towards China related investments, Mr. Benjamin Wey, President of New York Global Group and Visiting Professor of Finance at several universities worldwide, has demonstrated that investing in US-listed, China-based companies can be a highly profitable investment. He based his views on several statistics and cases that illustrate why businesses are just starting to discover opportunities in investing in China’s fast-growing economy through their U.S. listed Chinese companies.
Mr. Benjamin Wey shared that China’s outstanding and explosive GDP growth of 9% per year for the last 30 years has attracted some of the world’s fastest growing, most influential companies to China. He also discussed some of the important economic traits in Chinese business trends and further explained the effect of these factors on world trade.
He explained that, although, US-listed, China-based companies represent less than 3% of all listings on the NASDAQ and NYSE, the reasons for this are somewhat different from what others think or believe. His research shows that in the first half of 2010 more than 190 Chinese companies became public on China’s Shenzhen Stock Exchange. Not only this, these companies were able to raise almost $30 billion in capital – the highest amount in the world for growth companies. Within this time, the ChiNext has listed more than 100 new companies. These listings are currently at an average P/E multiple of 64 times. On the other hand, 200 China based companies listed on the NYSE and the NASDAQ have demonstrated similar earnings growth patterns and their shares are trading on average P/E multiple of only 7 times.
Mr. Wey shared that there are many Chinese companies that prefer to list on domestic Chinese stock exchanges instead of the U.S. markets. This is due to reasons like language, culture and regulation barriers that these companies find challenging. Many Chinese companies with long histories choose to list on China’s domestic exchanges, but China’s domestic listing inefficiencies drive Chinese companies towards listing in the US. For reasons like efficient, sponsor-driven and more transparent public listing processes, high growth Chinese companies often seek listings outside of China in markets such as the U.S., Hong Kong and Singapore as their primary destinations.
According to Benjamin Wey , the founding principles of a free market economy in the United States, less government intervention in private enterprises, and the NASDAQ and NYSE’s strong global reputation work as deciding factors for many Chinese companies who decide to list in the U.S. In return, U.S. investors can invest in China-based, high growth companies with their shares listed on the familiar U.S. stock exchanges – a win-win for both issuers and investors.
About Benjamin Wey:
Mr. Benjamin Wey is the President and founding partner of New York Global Group. NYGG is a leading Wall Street middle market advisory firm on China related transactions. With headquarters in both New York and Beijing, NYGG has more than 80 experienced and expert professionals. Benjamin Wey and his NYGG have been advising China based corporate clients with their strategic growth for the past 16 years.
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