Chinese firms may struggle to surface in Europe 

With Frankfurt likely out of bounds for Chinese company flotations after a series of corporate problems, their advisers would be forgiven for seeking alternative capital-raising venues around Europe. They will probably find it tough going.

Last week’s announcement by Frankfurt-listed Chinese shoemaker Ultrasonic (US5.DE) that its CEO had vanished along with about $60 million, may have heightened the sense of risk in buying shares in Chinese companies, even if they carry the seal of approval of being listed on a prestigious European bourse.

The fact that Ultrasonic CEO Wu Qingyong re-surfaced on Sunday saying he had simply been on holiday and had lost his mobile phone may not be enough to restore confidence in Chinese listings as a whole, even as U.S. investors lap up shares in tech leader Alibaba Group Holding (BABA.N).

Shares in both Chinese companies listed in Poland, Peixin International Group NV PEX.WA and JJ Auto JJO.WA, are trading well below their debut levels.

Peixin shares have lost around a third of their launch price last October, while Warsaw’s WIG index WIG. has climbed 11 percent over the same period. JJ Auto has lost about a quarter of its value, making it the worst debutant on the Warsaw bourse this year.

Previous problem cases included fashion group Kinghero (KH6G.DE), which accused its former chief executive of breach of fiduciary trust and later sought to delist, and Youbisheng Green Paper (YB1.DE), which initiated insolvency proceedings this year after its CEO went absent without explanation.

Yet the motive for Chinese companies seeking a listing remains the same: It is so much harder to float on a domestic bourse, often taking years instead of a matter of months.

 

Source: reuters- Chinese firms may struggle to float in Europe

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