China's IPO Train Loses Steam
The China fever that struck investors is cooling, and that's making some bankers sweat.
Investment bankers have worked themselves into a frenzy in recent months competing for the right to help some of China's biggest companies sell shares to international investors -- who have been equally enthusiastic about snapping them up.
Suddenly, though, the magic is gone. A spate of accounting controversies at some major Chinese companies with planned or recently completed public offerings reminded investors of the big risks lurking in the China market. Investors' growing skepticism has led companies and their bankers to postpone several deals to allow more time for a prelisting clean up. What had been a lineup of listings in Hong Kong and New York set for this year of hefty state-owned enterprises as well as second- and third-tier Chinese companies, aimed to raise tens of billions of dollars for the companies and tens of millions of dollars in fees for their bankers, is being delayed -- at least until next year.
Some planned listings are on track to hit the Hong Kong stock exchange this year, including a US$2 billion issue from coal company Shen Hua Group, a US$2 billion offering from China Netcom Corp., a big fixed-line phone operator, and a US$2 billion IPO by Ping An Insurance Co., one of China's largest insurers.
But bankers involved in the planned US$5 billion listing of China Construction Bank, one of China's four big state-owned lenders, now say that IPO is unlikely to happen this year. The earliest the big lender is likely to come to market is in the middle of next year, bankers say.
Also, bankers are no longer talking about a firm date for the US$1 billion IPO of China Minsheng Banking Corp., the country's only nominally private bank, following admissions that it faked a shareholder meeting and forged company documents prior to listing shares in Shanghai in 2000. Minsheng Bank's IPO had been slated for this month.
Bankers are putting the best face on the change. "I think it's healthy for companies to take more time before going public. That's no bad thing," says Mark Machin, head of capital markets for Asia, excluding Japan, at Goldman Sachs in Hong Kong
Just a month ago investment banks were racing to launch IPOs of Chinese companies while investor demand was high and equity markets were hot. At the start of the year, the portion of some Chinese IPOs in Hong Kong set aside for individual, or retail, investors was more than 1,000 times oversubscribed as a frenzy built for all things China.
Enthusiasm Wanes
However, scandals at Minsheng Bank and other China concerns have damped investor enthusiasm and, as a result, some recent IPOs have underperformed, leading investment banks to take a more cautious approach toward Chinese companies they take public.
"I think that many companies came to market too quickly," says Kingston Lee, head of China research at ING Group in Hong Kong. "But that's because, in a lot of cases, you don't wait for the company to get ready, you wait for the market to get ready to give you the money."
Although global markets have been receptive to Chinese stock offerings during the last six months, not all has gone smoothly. China Life Insurance Co., the country's largest life insurer, was recently hit with a class-action lawsuit by U.S. investors who claim the company failed to disclose several accounting irregularities ahead of its US$3.46 billion stock listing in New York and Hong Kong in December. A representative for China Life has acknowledged that the insurer is the subject of an investigation by the U.S. Securities and Exchange Commission over possible accounting irregularities.
The scandals at China Life and Minsheng Bank combined with overly high valuations are scaring off investors. What's more, recent Chinese IPOs have performed below expectations -- shares of Semiconductor Manufacturing International Corp., China's largest chip maker, fell 9% on their first day of trading March 18, following the company's US$1.8 billion IPO. Shares of Chinese Internet company Tom Online Inc. fell 7% on their March 11 debut following a US$194 million IPO in Hong Kong and New York's Nasdaq market. The shares of both companies have yet to recover the lost ground.
That is in stark contrast to the March 2000 initial public offering of TOM Online's parent company, Tom.com, now known as Tom Group Ltd. Listed in Hong Kong at the peak of the Internet stock craze, Tom.com's share price tripled on its first day of trading. Investment bankers blame the poor performance of SMIC and TOM Online on high prices and individual investors' wariness of Internet companies.
At the same time, analysts now are concerned that Beijing may raise interest rates this year to slow the country's accelerating economy and damp inflation -- a move that would hurt capital markets. Some analysts also are worried that markets may be getting saturated with shares of Chinese companies, which could depress share prices of those already listed and those yet to come to the market. "The main reason we turned negative on China stocks in January was because we thought there was too much supply," says Mr. Lee at ING. "Where's the buyer if too many Chinese companies list?" he asks.
"The bubble has now burst," J.P. Morgan Chase & Co. analysts wrote in a report last week.
Hong Kong-based shareholder advocate David Webb notes that shares of Chinese companies listed on the Hong Kong stock exchange have gone from boom to bust on two previous occasions -- in 1993 and 1997. "We've had three China bubbles in the last decade, and I suspect we'll have more," he says, adding, "I think we're still in a bubble. Look at the prices people are paying for Chinese Internet stocks."
Risks to Reputation
The negative market conditions and retail investor sentiment raise the stakes considerably for investment banks sponsoring Chinese company IPOs. Investment banks risk damaging their reputations and being exposed to shareholder lawsuits if something goes wrong with a Chinese company listing shares overseas. Yet, China represents a steady stream of lucrative business for the banks because it is expected to dominate world capital markets this year with several multibillion dollar listings.
"The only way to mitigate the risks is for the investment banks to take their time and do their homework on companies properly," says Mr. Webb, the shareholder advocate.
Many investment bankers say they welcome the cooling of enthusiasm for China because it allows them to slow down and take more time to prepare companies to meet disclosure and corporate governance standards in overseas markets such as New York and Hong Kong. They also say individual investors are now more likely to consider the fundamentals of Chinese companies they invest in rather than buying shares with no consideration of the company involved.
Aggressive Selling
"The recent profit-taking is healthy for the market. In our view there will be some reassessment by the market and there is likely to be a more selective approach resulting from this -- where quality companies will outperform the broader market," says Rowena Chu, head of equity capital markets for Asia at Deutsche Bank AG in Hong Kong.
Analysts say investment banks will have to work hard in coming months to restore investor confidence in Chinese companies -- aggressively selling the companies during overseas roadshows and ensuring that no further controversies arise to hurt investors' faith in China. Still, Jamie Allen, secretary-general of the Asian Corporate Governance Association, an independent body that promotes corporate governance in Asia, says that given the lack of proper corporate governance and regulatory controls in China, it is only a matter of time before a Chinese company scandal on the order of an Enron Corp. or WorldCom hits the Hong Kong stock exchange.
However, bankers also stress that institutional investors remain enthusiastic for Chinese companies and the long-term economic growth story of China. They say that they expect individual investors' enthusiasm for China to return later this year when some big issues come to market.
会计丑闻令中国IPO热潮降温
一度让投资者神魂颠倒的中国概念股热潮正在迅速降温，这让一些投资银行业人士惴惴不安。
最近几个月以来，为了从一些中国最大型的公司获得发行股票的投行业务，投资银行业内部已经争抢得不可开交。与之相比，国际投资者抢购中国概念股的热情也毫不逊色。
但奇迹突然之间就烟消云散了。一些计划或者近期已经结束首次公开募股(IPO)的大型中国公司相继爆出会计丑闻，这对于那些已经忘记了中国市场存在巨大风险的投资者来说不啻一记警钟。由于投资者的怀疑情绪不断增强，一些公司以及负责它们上市的投资银行业人士只好推迟了上市交易，以有更充足的时间来表明其上市前的清白。已经排队等候今年在香港和纽约上市的许多重量级中国国有企业和二三线公司的首次公开募股被至少推迟到明年。根据原来的计划，这些中国公司首次公开募股将筹资数百亿美元，并给投资银行带来数亿美元服务收入。 一些公司仍将按计划在香港交易所上市，其中包括中国煤炭企业神华集团(Shen Hua Group)和大型固定电话营运商中国网通(China Netcom Corp.)分别20亿美元的首次公开募股，另外，中国最大保险公司之一的中国平安保险(Ping An Insurance Co.)也将在香港股市进行规模20亿美元的首次公开募股。
但是，参与中国四大国有银行之一中国建设银行(China Construction Bank)上市计划的投资银行业人士目前表示，中国建设银行今年进行首次公开募股的可能性已经不大。他们称，这家大型银行最早的上市时间可能是在明年年中。
另外，投资银行业人士对中国民生银行(China Minsheng Banking Corp.)10亿美元首次公开募股的确切日期也不再津津乐道。民生银行原定于本月在香港交易所发行H股，该行是中国唯一一家名义上的私有银行。该公司最近承认在2000年于上海证交所上市前曾伪造过股东大会决议和公司文件。
投资银行业人士竭力粉饰中国概念股热潮的降温。高盛(Goldman Sachs)驻香港负责日本以外亚洲资本市场的主管梅克?梅钦(Mark Machin)说，公司花费更多时间上市是件好事。
仅仅一个月之前，各家投资银行还迫不及待地要尽早帮助中国公司实现上市，当时投资者对中国概念股的需求非常旺盛，股市也如日中天。在今年年初，由于一切与中国有关的股票都受到投资者狂热追捧，一些中国公司首次公开募股面向散户投资者的部分甚至获得超过1,000倍的超额认购。
然而，民生银行爆出的丑闻以及对中国的其他一些担忧打击了投资者的热情，受此影响，一些近期上市的弱于大盘，这促使投资银行对他们负责上市的中国公司持更加谨慎的态度。 荷兰国际集团(ING Group)驻香港的中国研究部门负责人Kingston Lee认为，许多中国公司上市的速度太快。但他表示，在很多时候，出现这种情况的原因是，投资者没有等待公司做好上市准备，只盼望著市场接纳这些公司，让他们获得投资回报。
尽管去年第四季度和今年第一季度全球市场对中国公司首次公开募股的接纳程度较好，但并非所有公司海外上市都一帆风顺。中国最大的寿险公司中国人寿保险股份有限公司(China Life Insurance Co.)的股价近期因美国投资者的集体诉讼而受到打击，这些投资者指控该公司去年12月份在纽约和香港进行规模高达34.6亿美元的首次公开募股之前没有披露几项会计违规事件。中国人寿的代表已经承认，美国证券交易委员会(U.S. Securities and Exchange Commission)正在就该公司可能存在的会计违规行为进行调查。
中国人寿和民生银行的丑闻以及过高的价格水平吓走了投资者。雪上加霜的是，近期首次公开募股的中国公司股价表现也不如预期。中国最大的晶片制造商中芯国际集成电路制造有限公司(Semiconductor Manufacturing International Corp., 简称：中芯国际) 3月18日上市首日下跌9%，此前该公司进行了18亿美元的首次公开募股。中国互联网公司Tom Online Inc. 3月11日首日上市交易下跌7%，该公司在香港和纽约的那斯达克市场的首次公开募股总额为1.94亿美元。目前，上述两家公司的股票尚未收回上市首日的跌幅。
Tom Online Inc.的疲弱表现与其母公司Tom Group Ltd.（原名Tom.com）在2000年3月份首次公开募股时的成功表现形成鲜明对比。Tom Group正值互联网泡沫高峰期时在香港交易所上市，并获得700倍超额认购，上市首日收盘价较首次公开募股价1.78港元（23美分）上涨了2倍还多。
投资银行业人士将中芯国际和Tom Online上市后表现疲软归咎于定价过高以及散户投资者对互联网公司心存疑虑。
与此同时，分析师还担忧北京政府今年可能会上调利率，以给经济降温并遏制通货膨胀。这样的举动将对资本市场造成负面打击。另外，还有一些分析师担心，市场内的中国概念股已经饱和，而这将压制已上市以及尚未上市中国公司的股价。荷兰国际集团的Lee说，中国概念股在1月份人气转淡的主要原因是新股供应过多。他说："如果太多中国公司上市，哪来那么多买进这些股票的投资者呢？"
摩根大通(J.P. Morgan Chase & Co.)分析师在上周的一份研究报告中写道："中国概念股的泡沫已经破裂。"
香港的股东权益倡导者大卫?维博(David Webb)指出，中国公司在香港上市的股票此前已经有两次由盛转衰，这两次分别发生在1993年和1997年。他说，在过去10年中，香港已经出现过3次中国概念股泡沫，估计以后也还会出现。他还表示："我认为现在香港股市还处于中国概念股泡沫之中，看看投资者买进中国网络股的价格就知道了。"
市场形势不利以及散户投资者人气转弱使得投资银行帮助中国公司首次公开募股所面临的风险大增。
如果在海外上市的中国公司出现差错，那么投资银行就面临名誉受损并遭到股东起诉的风险。然而，由于今年将在海外上市的几家中国公司首次公开募股规模高达数十亿美元，因此中国公司对于投资银行来说仍代表著高利润业务的稳定来源。 股东权益倡导者维博说，投资银行降低这种风险的唯一方法是不要急于让中国公司上市，而要在这些公司身上作足功课。
许多投资银行业人士说，他们乐于见到最近中国概念股出现的人气变冷现象，因为这样他们就可以放慢速度，花费更多时间来确保中国公司达到纽约和香港等海外市场有关信息披露和公司治理的规定。他们还表示，散户投资者也将更关注他们所投资的中国公司的基本面情况，而不会像原来那样不管基本面如何一律买进。
德意志银行(Deutsche Bank AG)驻香港的亚洲证券资本市场负责人Rowena Chu说，近期中国概念股出现的获利回吐对整个市场有利。他预计，市场将对中国概念股重新进行一番评估，投资者选股也将更为挑剔，从而最终导致质量较好的公司股票表现好于整体市场。 分析师说，投资银行未来几个月必须花费相当大的力气才能恢复投资者对中国公司的信心，即在海外巡回推介过程中要不遗余力地推销中国公司，另外，投资银行还要确保中国公司没有更多打击投资者信心的丑闻出现。在亚洲范围内促进公司治理的独立机构亚洲公司管治协会(Asian Corporate Governance Association)秘书长杰米?阿伦(Jamie Allen)说，鉴于中国缺乏有效的公司治理和监管控制，与安然(Enron Corp.)或者WorldCom类似的公司丑闻冲击香港股市只是迟早的事情。
然而，投资银行业人士强调称，机构投资者依然对中国公司以及中国经济的长期增长前景充满热情。他们表示，当几家大型中国公司于今年晚些时候上市时，预计散户投资者对中国概念股的热情将再度高涨起来。
