The People's Insurance Company of China, or PICC is
planning to go ahead with its initial public
offering later this year
. However, it remains to be seen if the company will go through
with its planned dual-listing in Hong Kong and Shanghai or if the
firm will just list in Hong Kong.
[caption id="attachment_52960" align="alignright" width="300"
caption="The fact that PICC is considering not listing in Shanghai
does not bode well for the local equity market"]
Chinese state-owned insurer PICC is looking to raise as much as
$3 billion in its IPO, making PICC's debut one of the largest IPOs
in the world this year. PICC is China's fifth largest insurance
However, it remains to be seen if the company will go through
with its initial plan of listing in both Hong Kong and Shanghai.
PICC is considering only listing on the Hong Kong's Hang Seng
exchange as the company is having trouble gaining approval from
regulators to list in Shanghai as well.
There is speculation that the Chinese government does not want
PICC to list in Shanghai over fears that this could cause
additional pressure on the Chinese stock market. The Shanghai
) is already down 18% this year, and with a major political
transition due later in the year, the government does not need the
market to move another leg down.
The hesitance on the part of both the government and a prominent
state owned enterprise should give investors who are considering
putting money into China pause.
With the Chinese economy slowing,
and Chinese investors losing faith in their equities markets
thanks to the opaque nature of the exchanges, the Shenzhen and
Shanghai exchanges are more likely to face downward pressure than
upwards going forward.
Investors looking for exposure to China are probably better off
looking at American-based multinationals with large sales in China
as their financials are much more easily accessible and, frankly,
trustworthy than those of some of their Chinese counterparts.