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China to dominate IPOs in 2010: analysts

NEW YORK -- Industry analysts say they are confident that China, among other emerging nations, will continue being the star of initial public offerings (IPOs) in 2010, and the U.S. capital market would still be its first choice.

“I'm optimistic that the trend (that Chinese companies raise more IPOs than others) will rise,” said David Y. Wong, managing director of investment banking at Newbridge Securities Corporation, at a panel discussion held on Jan 14 jointly by China Institute, Chinese Business Lawyers Association and Skadden, Arps, Slate, Meagher & Flom LLP (SASMF).

Wong says he's seen quite a bit of listed activities from Chinese companies in the U.S. capital market since the New Year and is sure that the entire number of transactions will be “more than last year”.

“(Companies from) the agricultural industry are quite active and I think the health care sector will be picking up as well,” he added.

Dealogic, a UK-based market analysis company, reported that Chinese companies alone sold US$50.4 billion of shares, accounting for 45 percent of the global IPO volume, according to the Wall Street Journal. The country is also dominant in the global clean technology capital market, according to another analysis provided by the market research firm The Cleantech Group and Deloitte.

The 2010 IPO market will also begin with the strong performance of Chinese companies - two out of five companies scheduled to make their IPO debuts this week are from China, according to Renaissance Capital, a Connecticut-based market research firm.

Robert Chilstrom, a senior lawyer who has been a consultant to Chinese companies for more than 10 years, pointed out that the emerging markets, particularly China and Brazil, would be winning in the capital market at least in a short run.

“The U.S. companies will have to compete in that space with these emerging markets,” said Chilstrom, from SASMF.

Crocker Coulson, president of CCG Investor Relations, was even more optimistic.

“If you look at the data, despite the low market, there's still a sizable inflow (of capital) into the emerging markets,” he said. “I think that will be a 10-year trend.”

Coulson's company has been helping about 50 Chinese companies listed in the U.S. stock markets, and the president is looking forward to seeing the number of its clients grow to 80 this year.

Not only is the size of Chinese companies entering the U.S. capital market increasing, the panelists added, but also their level of experience is growing.

“They are younger companies, but they're more sophisticated,” said Lawrence Wizel, director and audit communication chairman of American Oriental Biotech Co Ltd, 3SBIO Inc and PudaCoal Inc.

But the panelists also suggested Chinese companies carefully pick their consulting partners when they enter the U.S. market and be cautious about risks.

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