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China’s Capital Markets and Cross-Border Investments

11/02/2012

Experts discuss barriers and opportunities for investors at the Cornell China Conference


What is China’s capital market situation now, and what will future investment opportunities in China look like? From a Chinese investor’s perspective, what’s the current situation in the U.S. market? These were among the questions discussed at the Cornell China Conference by a panel moderated by Johnson’s George Gao, assistant professor of finance, Capital Markets and Cross-border Investments. The conference, held Oct. 27-28 and hosted by the Cornell Chinese Students and Scholars Association, was the first multidisciplinary conference focused on China held at Cornell. More than 40 speakers attended the conference.

Participants on the Capital Markets and Cross-border Investments panel addressed the issues from different perspectives. Panelists included: Huining Henry Cao, professor of finance and chair of the finance department at Cheung Kong Graduate School of Business; Ted Kamman, partner at Sidley Austin LLP; Shanquan Li, ​managing director and senior portfolio manager at Oppenheimer Funds; Barry M. Sine, ​CFA, CMT, managing director of equity research at Drexel Hamilton LLC; Ming Zhong, executive vice president at TCFA and senior portfolio manager at Lazard Asset Management; and Winston Ma, managing director at China Investment Corporation. Their discussion covered a wide range of topics, from global trends for cross-border investment to the Chinese government’s regulation of private equity.

China Investment Corporation’s Winston Ma observed that the cross-border investment structure is diversifying: “In the future, we will probably see more obstacles for takeover deals,” he said. “Government may call for minority and early-stage investments.”

Oppenheimer Funds’ Shanquan Li noted that there are many strategies Chinese companies can employ when they invest abroad. He observed that most Chinese companies try to gain controlling interest as shareholders all at once. Instead, Li advised, those companies should gradually increase their shares and learn more about the companies during the process before they make the decision to become controlling shareholders.

Market regulations in China made for a hotly debated topic. Sidley Austin’s Ted Kamman remarked: “There is too much regulation in the private equity market and too little regulation in capital markets. It needs to be reversed.” Others said the regulations are gradually improving. Huining Cao of the Cheung Kong Graduate School of Business pointed out that the China Securities Regulation Commission now has a research institute, the Beijing Institute of Securities and Futures; the intent is to base regulations on solid research. Johnson’s George Gao concluded that he believes China now understands how important research is, and that, hopefully, regulations based on research will provide more investment opportunities in China in the future.

 

 

Yuezhou Huo ’15 

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