The government should do more to lure initial public offerings
(IPOs) from other international markets, according to a recent
business sentiment survey.
CPA Australia's China division surveyed 162 business
professionals in November in first-tier mainland cities including
Beijing, Shanghai and Guangzhou. CPA Australia is the world's sixth
largest accounting body.
More should be done to attract IPOs from other markets,
according to 86 percent of the respondents. Half of those surveyed
said they would like to see more US companies listing on the
mainland, 15 percent Australian and 11 percent said more UK firms
should list here.
That response is in line with the strategy of Shanghai Stock
Exchange.
Que Bo, assistant to general manager of Shanghai Stock Exchange,
told Securities Daily in November: "We are considering
rolling out more financial tools for blue chips to attract HSBC,
Coca-Cola, Siemens and other multinationals in China to list in
Shanghai."
Some analysts said that's a step in the right direction and
would bring income for the domestic bourses, ease excess liquidity
pressure and enable multinationals to accelerate expansion
plans.
"Measures can be taken to attract multinationals - through the
legal framework, improved corporate governance, more skilled
financial professionals and better local-investor knowledge," said
Huang Zhensheng, vice-president of CPA Australia in Beijing.
Huang said the corporate governance of listed companies could be
improved by instituting an annual compliance statement and
independent review.
Corporate governance was a top concern for respondents - 87
percent said investors in Chinese companies were not adequately
informed of company activities and financial details. Meanwhile, 93
percent called for greater transparency in financial reporting and
99 percent said corporate governance need to improve.
"These figures are not too alarming when you consider the
maturity of the market in China. The government is making every
effort to bring companies in line with financial reporting
requirements and corporate governance standards but a lot of the
emphasis on implementing these changes is now the responsibility of
the business community itself," said Huang.
Mainlanders should also be allowed to invest directly in the
Hong Kong stock market, according to 75 percent of respondents.
Half of those surveyed believe direct investment should start this
year, and 99 percent said it would have an immediate positive
impact on the Hang Seng Index.
Shanghai was the most popular choice as a preferred location for
international firms' regional headquarters, with 76 percent
favoring the city over Hong Kong. Beijing was preferred by 15
percent of respondents and Singapore by 9 percent.
Respondents were bullish about China's economic outlook this
year. The nation's prospects for strong economic growth are
"excellent" according to 92 percent of those surveyed, while 44
percent said GDP would grow at 8 to 10 percent in the next 12
months and 22 percent predicted a rate of 6 to 8 percent.
Half of those surveyed said the mainland's economic growth would
continue beyond the Beijing 2008 Olympic Games. Only 23 percent said it
would slow down after the Games. Meanwhile, 40 percent expect the
consumer price index to cross 5 percent this year.
Respondents were also bullish about the Shanghai Composite Index
in 2008, with 15 percent predicting it would surpass 8000 points,
13 percent 7500-8000, 25 percent 7000-7500, 29 percent 6500-7000
and 7 percent 6000-6500 points.
Only 11 percent of respondents believed the index would fall in
the next 12 months.
"Business sentiment on continued economic growth in China is
certainly bullish and that is excellent news for the accounting
profession," said Huang. "There's a lot of optimism about the
performance of the Shanghai Composite Index in 2008 and continued
economic growth after the Olympic Games."
(China Daily January 4, 2008)
