China Economy is the World’s New Capital Of Capitalism
Money Moves East to the World’s New Capital of Capitalism
About: (Shanghai Stock Exchange, Shanghai Daily, China Economy, Chinese Economy, China Stock Digest, GDP growth, Agricultural Bank of China, Las Vegas Sands and Wynn Resort)
Mainstream media haven’t noticed it yet but the world’s financial center of gravity is slipping away from New York and London. In terms of raising capital, the west has already lost the battle for supremacy.
During 2009 China outstripped the United States in terms of the amount of money raised from new stock listings. It’s a powerful signal of a resurgence in Chinese investment while U.S. lending and spending languish.
Newly listed companies have raised more than $50 billion from initial public offerings on exchanges on the Chinese mainland (Shenzhen and Shanghai) as well as in Hong Kong so far this year. That’s about twice as much as the $26.5 billion raised from American IPOs.
Wall Street has led in IPOs every year since 2000 (except for 2006, when London was the destination of choice). But no more. And the trend doesn’t stop here.
Now U.S. firms are cashing in on Oriental liquidity. Casino companies Las Vegas Sands and Wynn Resort both floated shares of their Macau operations in Hong Kong recently, although the Las Vegas Sands listing didn’t impress Hong Kong’s jaded investors.
Next year the money momentum will increase. The Shanghai Stock Exchange is likely to emerge as the world’s biggest market for initial public offerings in 2010 according to globally respected auditor Ernst and Young.
The Shanghai exchange is now No. 3 globally in total funds raised for IPOs in the first 11 months of this year, following Hong Kong and the New York Stock Exchange.
Ernst & Young told the Shanghai Daily, “It is very reasonable to forecast that the Shanghai bourse may rise as the world’s biggest exchange for IPO activities in 2010, due to the rising significance of Chinese companies in the global IPO market.” Funds raised through IPOs are expected to more than double to $55.6 billion in Shanghai next year as the Chinese economy and the capital markets become more stable.
As Shanghai becomes the world capital of capitalism, new money raised in Hong Kong and Shenzhen will further tighten China’s claim to be the world’s epicenter for IPOs.
One of the Big IPO’s we’ll be watching for at the China Stock Digest is the listing of The Agricultural Bank of China, the sole state-owned bank yet to be publicly traded due to a backlog of government mandated non-performing loans which are now being cleared from the books.
The Agricultural Bank listing will be a major multi-billion dollar event on the world financial stage.
