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Would it be a good move for a US corporation to list its stock on Chinese stock exchanges?

1) Would it be a good move for a US corporation to list its stock on Chinese stock exchanges? What are the possible advantages and disadvantages of such a move? Based on your analysis, what would you recommend a US corporation?

2) Is it generally worthwhile for a non-US company to get listed on a US exchange? What are the advantages? What are ADR's? Based on your analysis, what would you recommend a non-US corporation?

3) Is raising money in US stock markets more - or less - difficult than in the rest of the world? Please answer this question in brief.

-Explain the differences requirements and regulations for raising equity in different countries

-Discuss the difference in risk and return in different stock markets around the world

-Describe the issues involved in raising capital in a global market

Solution Preview

US Corporation's Move to Chinese Stock Exchange
The movement of stocks into different stock markets has increased in recent years. There are many financial reasons for such move of stocks into different markets. For a US corporation, the move of listing its stocks into Chinese stock market would be quite effective since the growth rate of China is considerably high than USA (International Monetary Fund, 2010). The current economic conditions in US are not well in compare to China that has subsequently affected the performance of stocks in US. The stocks are not able to generate requisite amount of profit because of the downfall of economic condition in US. In addition to this, high demand from local investors in Chinese stock market also determines the effectiveness of such movement. The strict control of government over the financial market also determines significant growth of the US stock in Chinese market (Liaw, 2007). All these factors have subsequently contributed to the effectiveness of US stock movement to list in Chinese stock market.
Following are some advantages and disadvantages of movement of US corporation stock into Chinese stock market:

High growth: The Company may enjoy high growth in Chinese stock market in compare to US. The sound economic condition of China will help organization to generate maximum profit from Chinese market.
Loss Anticipation: Corporation could also anticipate the loss incurred in US market with such move into Chinese stock market.

Loss of external investors: In China, foreign investors are not allowed to invest in Chinese stock market. This would minimize the capability of organization to generate significant fund from the market.

The US Corporation should go for listing its stock in Chinese market since there is a huge growth opportunity in the market. In addition to this, it would also provide organization with the opportunity to explore other Asian markets.

Effectiveness of Non-US Company to List on US Exchange
It is beneficial for non-US companies to get listed on US exchange because it is the largest stock exchange in the world. There is a huge opportunity for non-US companies to explore the potential available in US with getting listed on the stock market. At the same time, the ...

Solution Summary

The expert examines the United States corporation to list its stock on Chinese stock exchanges.