Chapter 2
Realities, Theories, and Gung Ho
The Ying and Yang of Chinese Issuances
The U.S. saw an influx of Chinese growth IPOs, which dominated both the best- and worst-performing lists.
—Renaissance Capital1
Development arises from the contradictions inside a thing.
—Mao Zedong2
The China Wave
What has made Chinese stock listings such a hot topic in American finance comes from the impact of Chinese IPOs that surged in the United States toward the end of the first decade of the twenty-first century. This jolt of liquidity events from new Chinese issuances coincided with a time when U.S. stock markets were struggling for a fresh infusion of listing activity during and after a highly debilitating global financial crisis unleashed in 2008. Though within a few years Chinese listings would be forced to contend with a spate of negative market sentiment driven by foreign investor doubts over transparency, governance, and accounting practices, when the first wave of Chinese issuances hit American shores, it was met with enthusiasm.
The volume of IPO deal flow from the People’s Republic (PRC) began making an impression on Wall Street in 2007, a period of relative market buoyancy before financial markets around the world crashed in 2008. Chinese stock issuances in the United States in 2007 increased more than three times over 2006.3 China contributed half of the 25 best-performing IPOs of 2007, with two of the top three performers hailing from China’s world-leading solar energy technology ...
