Chinese companies continue to be drawn to US stock exchanges in 2014
HONG KONG, 21 July 2014 – Over 75% of companies from Greater China (China, Hong Kong and Taiwan) name the United States (US) as being the most strategically important country for new sources of investment, says a new survey from BNY Mellon.
According to BNY Mellon's Global Trends in Investor Relations Survey, which this week saw the publication of a China focus, the US, followed by Singapore (70%) and mainland China (66%) are the top three strategically important sources of investment to Greater Chinese companies over the next five years. Hong Kong topped the list of the last survey at 63%, and this year slid to fourth place at (62%).
"Chinese technology companies in particular continue to be attracted to the US and NYSE and Nasdaq," observes Neil Atkinson, Asia-Pacific head of depositary receipts, BNY Mellon. "This year to date, 10 Chinese companies have raised almost $4.5 billion using ADRs in US markets."
An interesting trend revealed in BNY Mellon's survey is the growing reliance of Greater Chinese companies on depositary banks and a diminishing reliance on more traditional brokers for certain investor relations assistance; up from 17% in 2012 to 26% in 2013. In the same period, 10% of companies surveyed globally reported depositary banks as one of the most important sources of IR-related introductions to investment professionals in 2013, up from 7% in 2012. Although the global reliance on brokers for Non-Deal Roadshows (NDRs) still remains high at 67%, it has dropped significantly over the prior years. Responses from companies in Greater China track this closely: falling from 91% in 2011 to 63% in 2013 for using brokers for NDRs.
Turning to the question what do you see as the issue with the most impact on global market confidence, companies from Greater China named 'sustainability of emerging market growth' as their main concern. This was opposed to 'systemic market risk', the issue that companies globally named as having the largest impact on overall global market confidence in 2013, up from second place in 2012. Eurozone stability was the top concern in the last Greater China survey, but it dropped to twelfth in 2013, consistent with the global trend.
BNY Mellon's survey reveals that the top two investor relations goals for companies in Greater China over the next five years are to expand or enhance engagement with existing shareholders (47%) and increase international shareholder ownership (47%). These are in line with the top two goals named by respondents worldwide; 51% and 46% respectively.
"We continue to receive queries from companies in Greater China who are looking for guidance on best practices with respect to investor engagement," said Herston Powers, Vice President, Senior Investor Relations Specialist at BNY Mellon. "It is clear from the results of our study that many firms in this region are taking investor relations seriously and we expect this to continue as companies become ever more sophisticated in their search for new investors."
Developed as a benchmarking tool for BNY Mellon's depositary receipt clients, the survey, Global Trends in Investor Relations, looks at how publicly traded companies are managing their IR practices and the issues affecting them. This year's report is based on survey results from nearly 700 respondents across 63 countries that span the range of market cap and industry sectors, including financials, industrials, consumer, technology and healthcare. This report, Global Trends in Investor Relations: A Survey Analysis of IR Practices in Greater China uses the responses of almost 80 respondents from Greater China only.
This is the ninth annual investor relations survey conducted by BNY Mellon's DR team. Download the full report.
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Pui Shan Lee