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The Lure Of A U.S. Listing Remains Powerful For Some Chinese Companies

Publication Date: 
March 15, 2011
Source: 
The AmLaw Daily
Author: 
Anthony Lin

Research conducted by Stanford Law School's Securities Class Action Clearinghouse was mentioned in the following article on listings of Chinese companies in the U.S. The AmLaw Daily's Anthony Lin reports:

With top U.S. capital markets firms virtually stepping over each other to launch Hong Kong law practices, one might think that the best days for U.S. securities law practices in Hong Kong and China are over, and that Chinese companies are now turning exclusively to Hong Kong, Shanghai, and Shenzhen for their capital-raising needs.

Not exactly.

The New York Stock Exchange saw a record 22 listings by Chinese companies last year, with Nasdaq taking on another 12. Both numbers were up sharply from 2009, when only ten Chinese companies listed on either exchange. In 2008 there were only three U.S. listings by Chinese companies.

...

Industrial and manufacturing companies tend not to get the share price boost of tech or consumer companies, says Huang, defeating the purpose of a U.S. listing in the first place. In the meantime, reverse-merged companies are drawing attention from the Securities and Exchange Commission and shareholder class action lawyers. (Nine of the twelve Chinese companies named in U.S. securities class actions in 2010 were listed in the United States through reverse mergers, according to Stanford Law School's Securities Class Action Clearinghouse.)