Regulators Building Investor Confidence—Chinese Style

Recent events foreshadow the opportunities and challenges that Chinese companies and their investors will face in both the U.S. and People’s Republic of China as they seek to access the public capital markets. A speech by the head of the U.S. Securities and Exchange Commission (SEC) and a collaborative effort by three major PRC governmental and financial institutions to establish a 10 billion (RMB) investor protection fund send a strong and very positive message to the global investment community. The message is that securities regulatory agencies recognize that many Chinese companies are currently ill-prepared for the regulatory demands of the public capital markets and stand ready to rectify this situation. As securities regulators continue to shape the landscape of the capital markets, one message is clear—the critical element to an efficient marketplace for Chinese companies is the establishment and enhancement of investor confidence.