For a banker, no panic in China
“Well insulated” China, though suffering from sharp drops in its own equities markets, doesn’t have the sense of crisis that exists in the U.S., says Philip Partnow, managing director of UBS Securities Ltd in Beijing. UBS, the first Western bank to assume management control of a domestic mainland brokerage, points out the fact that what’s hitting companies is not subprime-related securities gone bad.
“I think there’s nothing here we feel is toxid,” he told Reuters on Wednesday at the Reuters China Summit in Beijing. He goes on:
“The Chinese capital market has responded quite differently than global capital markets and that is because the Chinese capital markets are still pretty well insulated by the way China controls the RMB and by the other financial controls that China has.
“It is true that both the Shanghai A-share market and the Heng Seng market have fallen quite steeply, but that is more in response to a correction from what many people believe was an over-inflated stock bubble, rather than a direct response from some financial crisis or concern. That’s been then followed on by some concerns that people have about a weakening economic sentiment in the U.S. and Europe and Japan, which are China’s key export markets, and what the knock-in impact will be in China. So there is also a fundamental concern.”
“But there is not a sense of distress or of crisis, or that things that people thought were valuable suddenly vanishing into thin air, along the same lines of what we’ve seen with some of the things that were happening with Subprime and the complex structures that were set up around the subprime, back in the United States. So I think there’s nothing really that we feel that is toxic, out here in China, so we are broadly comfortable with the businesses that we’re in. “
By Lucy Hornby


Venture capital firms are pouring money into bad deals in China through “shotgun investing,” warned David Chao, cofounder and managing general partner of Doll Capital Management. “I had one of our companies check into how many YouTube-like companies are there in China. There are 150 of them — 150 — and many of them, most of them, are being venture backed today.” He said that there may be $300 million invested in that one area. “If you ask me are there bad deals done — most likely 148 of them are bad deals,” he predicted.
The Nasdaq stock market’s once quasi-monopoly over technology IPOs has been “absolutely destroyed” by the Sarbanes-Oxley corporate governance and accounting law, said Claude Leglise, the managing director of venture capital firm WI Harper. “We could argue the details but the magic is absolutely broken,” he told the Reuters Venture Capital Summit. He said that Hong Kong, Singapore, Tokyo and London were now all potentially appealing alternatives because of the costs of listing in the U.S.