International Research

 

 

As an experienced financial advisory firm, we provide our clients with first class consultation from an international perspective. We use our extensive knowledge of the native industry markets to aid our clients in overcoming the unique challenges of achieving success in the international capital markets. We work with our clients in any stage of their company’s development and strive to realize the success and longevity of our client’s business.  Our team is comprised of both experts that understand the interenational markets and those that understand working in the local native business environment.

  • Offer comprehensive packages of value added services that incorporates all stages of company's development from the initial idea to the implementation of an exit strategy;
  • Help clients maximize growth potential and raise venture or private equity capital;
  • KWCP uses a large pool of resources and a strong influence on the international growth business community to launch our clients into the international business community’s sphere;
  • KWCP not only offers advice, but also forms a long term mutually beneficial partnership with our clients

To receive more information, please contact ken.bush@kwcapitalpartners.com.

Market Gauges

At KWCP, we see ourselves as the key element to good business relations between foreign investors and their Chinese Partners. Seeing as how both GDP and Foreign Direct Investment (FDI) have been growing, and are forecasted
to continue, we believe this is the time to capitalize on China’s enormous potential.
As investors, we understand that there are many determinants that depict and portray a sound environment to invest in.

We have identified several aspects that investors should consider when investing in China. China’s capital ratio, using Tier 1 capital, is reasonably high translating into the banks sufficient ability to sustain future losses, if any.

In 2007, for the first time in history, the market capitalization of publicly listed companies in China surpassed GDP. Prior to this achievement market capitalization only reached moderate levels, hindering growth capabilities. Despite the economic downturn coming immediately after such economic achievements, growth is expected to resume in 2010.
Investors interested in the venture capital side of China may look at criteria regarding the time and effort needed to start a company. It takes on average six weeks (roughly 40 days) to start a company from scratch. Within this time period, all aspects are dealt with to ensure the legality of the company.  In addition to the relatively short start up time, China also has a low number of procedures and interactions in order to adequately register a business. With approximately 14 procedures, aspects such as licenses, permits, verifications, and inscriptions are all completed to commence business operations.

Regular market factors also play a role in the decision to invest in a foreign territory. The table below represents the three major U.S. indices along with two the major Chinese indexes. Despite having only been established since 1969, the Hang Seng Index is a good representation of the market in Hong Kong. The Shanghai Composite Index, having only been around for 20 years represents the major companies on the Shanghai Stock Exchange. The exchange is still not completely open to foreign investors due to tight capital and account controls. The negative growth of the index represents an opportunity for investors to come in and take advantage of China’s massive expansion.

Questions

What is "Shanghai Stock Exchange"?

The Shanghai Stock Exchange (SSE) was founded on Nov. 26th,1990 and in operation on Dec.19th the same year. It is a non-profit-making membership institution directly governed by the China Securities Regulatory Commission (CSRC). The SSE bases its development on the principle of "legislation, supervision, self-regulation and standardization" to create a transparent, open, safe and efficient marketplace. The SSE endeavors to realize a variety of functions: providing
marketplace and facilities for the securities trading; formulating business rules; accepting and arranging listings; organizing and monitoring securities trading; regulating members and listed companies; managing and disseminating market information. After several years' operation, the SSE has become the most preeminent stock market in Mainland China in terms of number of listed companies, number of shares listed, total market value, tradable market value, securities turnover in value, stock turnover in value and the T-bond turnover in value. December 2007 ended with over 71.30 million investors and 860 listed companies. The total market capitalization of SSE hit RMB 26.98 trillion. In 2007, Capital raised from SSE market surpassed RMB 661.6 billion. A large number of companies from key industries, infrastructure and high-tech sectors have not only raised capital, but also improved their operation mechanism through listing on Shanghai stock market. Entering the new century,SSE is faced with great opportunities as well as challenges to further boost the market construction and regulation. Combining the cutting-edge hardware facilities, favorable policy conditions in Pudong, exemplary role of Shanghai economy, SSE is fully committed to the goal of State-owned industrial enterprises reform and developing Shanghai into an international financial center with great confidence.

What is "Shenzhen Stock Exchange"?

The Shenzhen Stock Exchange (the SSE) is a mutualized national stock exchange under the China Securities Regulatory
Commission (the CSRC), that provides a venue for securities trading. A broad spectrum of market participants, including
540 listed companies, 35 million registered investors and 177 exchange members, create the market. Here buying and
selling orders are matched in a fair, open and orderly market, through an automated system to create the best possible
prices based on price-time priority. Since its creation in 1990, the SSE has blossomed into a market of great competitive
edges in the country, with a market capitalization around RMB 1 trillion (US$ 122 billion). On a daily basis, around 600,000 deals, valued US$ 807 million, trade on the SSE. China securities market is undergoing fundamental changes. The implementation of the new Securities Law, Company Law, self-innovation strategy as well as the development of
non-tradable share reform embodies enormous opportunities to the market. Adhering to the principle of “Regulation,
Innovation, Cultivation and Service”, the SSE will continue to maintain its focus on developing the Small and Medium
Enterprises Board, while seeking for a tier market.

What is "SSE Composite"?

The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded on the Shanghai Stock Exchange. It includes the values of 50 Chinese companies.

What is "QFII"?

Qualified Foreign Institutional Investor.

What is "China Securities Regulatory Commission"?

The China Securities Regulatory Commission (CSRC) is an institution of the State Council of the People's Republic of
China (PRC). It is the main security (finance) regulator of the PRC. Its functions are similar to that of the U.S. Securities
and Exchange Commission in the United States.

What is "People's Bank of China"?

The People's Bank of China (PBC or PBOC) is the central bank of the People's Republic of China (not to be confused with
the Bank of China or the Central Bank of China) with the power to control monetary policy and regulate financial institutions in mainland China. The Governor of the People's Bank of China is nominated by the Premier and approved by the National People's Congress, and is also member of the State Council.

What is SAFE?

SAFE, administration of Foreign Exchange. It’s major functions are:1. To study and propose policy suggestions on the
reform of the foreign exchange administration system, prevention of the balance of payments risks, and promotion of the
balance of payments equilibrium; to study and implement policy measures for the gradual advancement of the convertibility of the RMB under the capital account and the cultivation and development of the foreign exchange market; to provide suggestions and a foundation for the People's Bank of China to formulate policy on RMB exchange rate. 2. To participate in the drafting of relevant laws, regulations, and departmental rules on foreign exchange administration, releasing standard documents related to the carrying out of responsibilities. 3. To oversee the statistics and monitoring of the balance of payments and the external credit and debt, releasing relevant information according to regulations and undertaking related work concerning the monitoring of cross-border capital flows. 4. To be responsible for the supervision and management of the foreign exchange market of the state; to undertake supervision and management of the settlement and sale of foreign exchange; to cultivate and develop the foreign exchange market. 5. To be responsible for supervising and checking the authenticity and legality of the receipt and payment of foreign exchange under the current account according to law; to be responsible for implementing foreign exchange administration under the capital account according to law, and to continuously improve management work in line with the convertibility process of the RMB under the capital account; and to regulate management of overseas and domestic foreign exchange accounts. 6. To be in charge of implementing supervision and checking of foreign exchange according to law, and punishing behaviors that violate the foreign exchange administration. 7. To undertake operations and management of foreign exchange reserves, gold reserves, and other foreign exchange assets of the state. 8. To arrange development planning, standards, and criteria for IT-based foreign exchange administration and organizing relevant implementation; to realize supervision of information-sharing with the relevant administrative departments according to law. 9. To take part in relevant international financial activities. 10. To undertake other matters as assigned by the State Council and the People's Bank of China.

What is MOFCOM?

MOFCOM, ministry of communications.