I am watching this very interesting trend. Why are Chinese companies so interested in listing in the United States when Asian markets are flowing with capital? I have encouraged North American companies to look to Asia for capital, especially in the natural resources sector since the high growth countries like China are clamoring for resources. However, the trend over the past couple years is Chinese companies raising their capital in the United States. Why? The skeptic in me thinks, hmmm we couldn’t detect WorldCom, Enron, Madoff till it was in our face and way too late. Do you think the sponsors of these deals are getting quality due diligence done in China to assure investors that everything is on the straight and narrow? I am hopeful, but skeptical. I think this story will become apparent in the coming years. Our markets have had enough set backs and hopefully these foreign companies getting deals done in the United States are legitimate. As a securities analyst, it’s tough to opine on the quality of any of these companies without doing onsite due diligence. A few thousand dollars in airfare, language and culture barriers make my due diligence impossible, so I’ll watch from the sidelines.
Patrick E. Donohue, CFA