Great expectations and great results for Chinese companies are witnessed on US stock exchanges. Five companies from the mainland (plus 1 from Taiwan) just launched their initial public offerings, a record number in a single week. Chinese IPOs in New York are now 39 for the current year, above the record of 37 in 2007. The debuts on December 8 were very promising, particularly for Youku.com and Dangdang.
The first – an online video company known as “the Chinese Youtube” – soared 161% above its IPO price just in the first day of trading. Less spectacular but still impressive was the 87% soar of Dangdang, the on line retailer of books and media, holding half of the domestic market (“the Chinese Amazon”). Its ambition to widen its business line to beauty, home and baby products has been rewarded. Beyond the first-day euphoria, the prices’ soar reinforces two assumptions: Chinese companies’ IPOs have better returns compared to the average of all US IPOs this year (30% vs 23%); investors believe in rising consumption in China, specifically for online selling, and are ready to bet on a more affluent society.
If sophisticated international financial markets bet strongly on the rising Chinese consumer good market, maybe it is also time for EU Governments to trust that soon growing internal demand will adjust China surplus in its balance of payment as recent figures as a % of GDP show (from 10% to 4% in 2010). Hopefully the EU will also recognize, 20 years behind schedule, that China has earned its right to a “market economy status”.