January 25, 2005American Banks Enter ChinaMerrill Lynch is going to enter the market for underwriting Chinese securities, it reported today. But many say there is no need to rush into the market, citing the difficulty in finding the right partner, regulations precluding majority control, and the pace of regulatory changes in China's fast-evolving securities markets. Add to that opaque financial and unreliable economic numbers, cozy loans from banks to state-owned businesses (a la South Korea), and an increasingly untenable currency situation. Sure, the Chinese boom is likely to go on for a while. A few serious financial reverses won't alter the long-term trend there, any more than they did here, 150 years ago. But that's no reason to set yourself up. Still, if Merrill has learned something, and has the guts to stand up to its domestic partners (so to speak) and demand better reporting, it could help to encourage better standards on the part of Chinese businesses. Or, they could end up lending their good name and respectability to enterprises doomed to destroy market capital on an untold scale. Posted by joshuasharf at January 25, 2005 03:41 PM | TrackBack |
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