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Betting on China: Chinese Stocks, American Stock Markets, and the Wagers on a New Dynamic in Global Capitalism

Betting on China: Chinese Stocks, American Stock Markets, and the Wagers on a New Dynamic in Global Capitalism

Robert W. Koepp

ISBN: 978-1-119-19926-7

Oct 2015

240 pages

Description

The promise and perils of Chinese stocks in American stock markets

Betting on China takes readers on an illuminating journey into the often confusing and poorly understood world of Chinese stock issuances in America. With insightful qualitative and quantitative analysis, it looks at the phenomenon of equity and capital exchanged between the world's two largest economies and the implications for global finance. Written in an accessible narrative style and amply supported by hard data, the book examines the context and underpinnings of the Sino-American equity relationship, revealing its core dynamics through real-world case studies that range from the precedent-setting blockbuster IPO of China Mobile to the near breakdown of the U.S.-China equity exchange mechanism brought about by short seller attacks on Chinese concept stocks.

Combining an insider's eye with an outsider's objectivity, American born author and Beijing-based consultant Robert Koepp explores the reasons and the means by which China, America, and the global economy reap enormous gains from the process of Chinese companies issuing equity shares on U.S. stock markets. Betting on China exposes the complexities and nuances of a vital but underappreciated pillar of modern international finance and offers a window into China's role as a dominant but still modernizing economic superpower.

  • Analyzes on a macro- and microscale the forces that move Chinese companies to raise capital on NASDAQ and the New York Stock Exchange and what this means for the world at large
  • Explores the real stories behind why and how China-based enterprises develop as public companies listed in the United States—and why government regulations need to work in support of and not against this force of market nature
  • Shows that the "betting" on China that occurs through the U.S. equity market exchanges is critical for getting an accurate picture of China's position and prospects in our interactively connected global economy

Detailed but accessible, Betting on China is essential reading for global finance professionals, policymakers and regulators, students of finance, people doing business in China, and anyone curious about China's place in—and impact on—the global economy today and in the years to come.

Acknowledgments xi

Preface xv

Chapter 1 Wagers of the Dance: China, America, and the Interplay of Public Equity 1

A Hierarchy of Financial Footwork 1

IPOs for Cash-out and Cash-in 5

A Ground-Level View 7

U.S. China Issuances Measuring Up 22

Chapter 2 Realities, Theories, and Gung Ho: The Ying and Yang of Chinese Issuances 25

The China Wave 25

Big-Stakes Games 28

Ying–Yang IPOs 32

Market Détente 35

Breaking Molds 40

Adam Smith's China Bet 42

Gains, Rules, and Risks 44

Information versus Noise 46

Real "Gung Ho" 48

Chapter 3 China Mobile: The Big Bet 51

First Dish in an IPO Banquet 53

Birth in a Maelstrom 57

Ripple Effects 60

Assimilating Global Standards 62

Of Men and Governance 66

Red Chip Scare 68

Spillover Effects 71

Quantity, Banditry, and Quality 75

New Generations, New Markets 78

Nothing and Everything 81

Chapter 4 Spreadtrum Communications: When the Chips Are Down 85

Stirring the Waters 87

The Basic Spreadtrum Story 92

Leading a New Chinese Industry 96

Pulling Back from the Brink 98

Shortsighted Shorting 101

Shorts Caught Short 105

Chapter 5 Calling the Bluff: Truths, Fictions, and CRMs 109

Initial Misgivings 111

In Through the Back Door 113

Dawn of the CRM Dread 116

A Short Love Affair for CRMs 119

Unaccountable Accounting 123

The Din of CRM Noise 125

A Reversal for RM Overhype 128

Chapter 6 Longtop Financial: The Costs of Dirty Dealing 133

The Longtop Shocker 133

A Fallen Icon 137

Deception's Depths 139

A China Problem? 142

New Stakes in the Game 145

The SEC's Big Bet 148

Upping the Ante 150

Beyond the Brink? 155

Chapter 7 Continuing the Bet: Accountability and Adaptability 161

Evolving Accountability 161

The Adaptability Challenge 163

Appendix 167

Notes 187

About the Author 199

Index 201