It’s always nice to feel wanted – and Chinese companies considering an overseas stock market listing have no shortage of wannabe friends these days.

According to Thomson Financial, initial public offerings of Chinese companies are on course to raise a record $100bn this year, with about 40 per cent on non-mainland bourses. Next year’s volume could be just as strong.

Singapore and Hong Kong are falling over themselves to be the destination of choice for capital-hungry mainland companies, while smaller Chinese companies are still attracted by the perceived lighter-touch regulation of London’s Alternative Investment Market.

But what of US efforts? On Monday Nasdaq followed the New York Stock Exchange by opening a representative office in Beijing, from which it plans to charm Chinese executives with tales of higher valuations and an ocean of institutional capital.

Nasdaq has made a decent showing this year, attracting 19 companies compared with just nine last year.

But the US exchanges face steep challenges, including the time zone and worries about the country’s litigious corporate environment.

The biggest challenge, though, is that Asia is so awash with liquidity that issuers rarely need to look beyond Hong Kong. Among other US institutions to have opened offices in Asia recently are scores of fund managers, hedge funds and private equity funds.

Slice and dice

Stanley Ho, the Macau casino mogul, has just paid $330,000 for a giant white truffle in a charity auction. Genting, the Malaysian gaming group, has spent £30m or £40m on a 10 per cent stake in Rank, the British casino and bingo company. Who made the better bet?

Mr Ho’s has acquired worldwide publicity for his soon-to-be-floated gaming company, a place in the record books (at least until the next time a monster fungus is auctioned), and an asset that, while fast depreciating in value, can be sliced up into smaller pieces to be sold or consumed at will.

Genting, by contrast, seems to have invested in an asset that, at least for now, looks hard to break up and even tougher to sell.

That doesn’t mean the Malaysian group’s gamble is rash. Before its recent streamlining, Rank was the owner of everything from Britain’s famous Pinewood film studios to the Hard Rock Café chain.

But Genting has bought an option over its future at a low point in the group’s fortunes. Bingo (gaming for Britain’s non-truffle-eating classes) and casinos have both been hit by national bans on smoking. Government policy on expanding the number of licences for small and medium-sized casinos is in limbo.

The group’s casino licences do have value, even if bingo would be hard to sell in this climate. Genting could try to combine them with the casinos it acquired when buying Britain’s Stanley Leisure last year, or sell its option to US, Asian or British competitors.

Defensive or not, the investment should help prop up Rank stock, which is good news for shareholders. Having completed the restructuring, however, Rank’s management is virtually powerless to determine the group’s destiny. Only a truffle has less influence over who
devours it.

Sarkozy’s silver

French unions have predictably complained that Nicolas Sarkozy is selling the family silver to finance his reforms. But the French president seems to be acting like a clever investment banker by taking the gains of his sale of a small EDF stake and reinvesting them in the future of the country’s university system.

In terms of allocation of assets, what could be better? The government is cashing in on a high – the electricity group’s shares have never been worth so much. It is redeploying the money where potential gains are greatest, in higher education. The unions should be applauding and asking for more. After all, the government can still sell another 13 per cent of EDF without breaching any laws.

The unions are worried by the state’s loosening grip on its energy champions. But at least the money is not going to be thrown down the bottomless pit of French debt where the €5bn that the EDF share sale will fetch would make little difference.

Mr Sarkozy is at the same time showing a talent for getting out of tight spots – in this case, the need to stem growing student discontent over university reform. He has so far resisted dipping into state finances to resolve his problems. By selling only up to 3.7 per cent of EDF, he has left himself plenty of room to sell even more next year, should circumstances require.

world.view@ft.com

Get alerts on Columnists when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article