The return of enterprises from overseas markets has the potential to tremendously increase the gross value of Chinese mainland stock markets, and in turn would raise the overall quality of the A-share market. However, "with the influence on the market of the revaluation of the renminbi, large-scale enterprises returning from overseas may create risks in the market, which could lead to an increase in arbitrage of underground funds on the Chinese mainland and in the Hong Kong market," said Ji Baocheng, President of Renmin University of China. "These enterprises should plan ahead and arrange the phased return of H-shares to the Chinese mainland market to avoid the risk of huge returns in a short period."

Therefore, deciding on how to plan for the return of listed overseas companies to the A-share market is a process guided by both governmental decisions and market choices. Some experts suggest that H-share companies, especially high-quality, large-cap corporations, should return first, followed by other overseas-listed companies.

Energy craze

From December 15, 2006 to January 15, two of the top five recipients of IPO investment funds in the United States were energy corporations. One of these was Solarfun Power Holdings Co. Ltd. from Jiangsu China, which ranked third. The other was Legacy Reserve LP (LGCY), an oil and natural gas company from the United States, which ranked fifth with $114 million.

From July 2006 through to the end of the year, a total of nine energy corporations launched IPOs and got listed on the U.S. stock market: Penn Virginia GP (PVG), North American (NOA); Constellation (CEP); Eagle Rock (EROC), BreitBurn (BBEP), EV (EVEP), Hiland (HPGP), Buckeye GP (BGH) and Valero GP (VEH).

Energy companies in China are also strong. After Wuxi Suntech Power, Canadian Solar Inc. and Zhejiang ReneSola succeeded in launching their IPOs, corporations such as Changzhou Trina Solar and Jiangshu Solarfun Power Holdings Co. Ltd. soon followed suit, collecting $98.05 million and $150 million respectively. China Coal was the top performer, collecting HK$13.15 billion from its Hong Kong IPO.

Both venture capital and financing through IPOs greatly encourages energy companies. Apart from Zhejiang ReneSola, which didn't seek venture capital in its early stages, Canadian Solar Inc, Changzhou Trina Solar and Jiangshu Solarfun Power Holdings Co. Ltd. all received funding from venture capitalists.

(Xinhua Finance)

DISCLAIMER: The information contained herein is based on sources we believe to be reliable, but is provided for informational purposes only, and no representation is made that it is accurate or

complete. This briefing should not be construed as legal, tax, investment, financial or other advice, and is not a recommendation, offer or solicitation to buy or sell any securities whatsoever.