Stepping up to the Capital Market plate, China!
For a while now, I've been hearing of the potential China has going forward, and I just never realized the magnitude until I read this article on the WSJ.
“On its own, Hong Kong has seen US$11.8 billion in IPOs in 2015, beating the New York Stock Exchange’s $9.1 billion. The NYSE’s top IPO this year was the $1.4 billion float in May by gas-transport-services firm Tallgrass Energy GP.”
“With Chinese valuations so high, bankers say, many Chinese companies are choosing to stay home and raise funds, rather than tap the U.S. market as was the trend in recent years among the country’s fast-growing technology companies. Contrary to expectations that Alibaba Group Holding Ltd.’s $25 billion U.S. listing in 2014 would lure others to follow, this year Chinese tech companies have raised US$2.3 billion in China IPOs, well above the $150 million raised in the U.S. And more could come as Beijing eases domestic listing rules.”
“The Shenzhen Composite Index has almost tripled since the beginning of last year and is up 114% this year, making it the world’s top-performing index. Its shares trade at a heady price/earnings ratio of 69, based on 2015 forecasts, according to WIND Info. The Shanghai Composite has risen 53% in 2015, and has a P/E ratio of 21. By contrast, the Dow Jones Industrial Average was up just 1.4% this year as of Wednesday, though it is hovering near a record high. It is trading at an average price/earnings ratio of 16, according to FactSet. Hong Kong’s Hang Seng Index is up 17% this year and has an average P/E ratio of 12.”
I’m curious, as China becomes more developed and industrialized in all areas of the country (to a level comparable to what we are), how big of a role do you think they will play globally? Is this healthy competition or do you think we’ll soon be displaced in the world as China develops the ability to raise more capital in their market back at home versus doing so in the US? Is our system so sophisticated that China isn’t even a threat?
What do you guys think?
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