More small and medium-sized Chinese companies are expected to be
listed on overseas capital markets in the coming two decades, said
the senior director of NASDAQ (China).
Harry Huang said this would become a major trend for Chinese
companies seeking funding from overseas markets in the coming 20
years.
The mechanisms of overseas markets such as New York's NASDAQ are
quite suitable for small and medium-sized companies, Huang
added.
The government should beef up efforts to help these companies
because they play an important role in economic development, he
said.
The small and medium-sized companies, most of which are private
firms, have developed rapidly in the past two decades.
They contribute more than 30 per cent of China's gross domestic
product.
However, they account for only 3 percent of China's total overseas
listed companies in terms of market capitalization and only 22
percent in terms of numbers.
Niu Li, a senior economist with the State Information Center in
Beijing, said: "They are still greatly under-represented in
overseas equity offerings.
"We expect a new wave of small and medium-sized companies seeking
overseas listings in the coming years."
What really lies behind that wave is the limited domestic financing
resources for private companies thirsty for funds, he said.
"They always find themselves in an unfavourable position compared
with State-owned companies regarding access to commercial loans,"
Niu said.
The domestic stock markets seem to be designed to help reform
State-owned enterprises and the listing requirements are too strict
for small and medium-sized private enterprises, said a senior
economist with the State Information Centre, identified only as
Zhang.
"Even if they are qualified, they still have to wait in an endless
queue to be approved for the yuan-dominated A-share markets," said
Zhang.
The door of the hard-currency B-share markets still remains shut to
new offerings, he said.
Meanwhile, the long-anticipated second board - which is expected to
facilitate fund raising by small companies - has been shelved,
Zhang said.
(China Daily March 24, 2003)