Overview

Private equity (PE) refers to equity investment in a company in which the equity does not trade on a public stock market. Private equity covers a wide range of deals, including seed, expansion, turnaround, and buyout. Venture capital funding provides growing companies early stage financing. There are many failures for every successful investment. Buyouts are aimed at improving corporate performance and financial status to enhance value, and then take profits. China has a large...

Growth Of Mutual Funds In The United States

Mutual fund investing began to grow in popularity in the 1940s and 1950s, but the explosive growth did not occur until the 1980s. In 1960, there were 160 funds with 17 billion in assets. Ten years later, there were 361 funds with total assets of 47.6 billion. By 1980, the number of funds had reached 564, and the total assets under management were 134.8 billion. In 1990, U.S. mutual funds managed more than 1 trillion. By yearend 2006, more than 10 trillion was invested in mutual funds (Table...

Chinese Companies Listed In The United States

An ADR of a Chinese company is a negotiable certificate that trades in the United States and represents ownership of shares in a Chinese corporation. Each ADR represents a specific number of underlying shares deposited at a local custodian in China. Table 17.1, 17.2, and 17.3 lists samples of Chinese ADRs on the New York Stock Exchange, American Stock Exchange, and NASDAQ. In the United States, the growth of ADRs in recent years is a testament to their popularity. The total number of sponsored...

Market Opening In Insurance

Under the WTO accession agreement, China is committed to opening its insurance market.11 The main commitments of the Chinese government in opening the insurance business are discussed next. Immediately after China's entry to the WTO, nonlife insurers from abroad were allowed to set up branches or joint ventures in China. Foreign firms gained the permission to hold as much as 51 percent of the stake in the joint ventures. Two years after the entry, nonlife insurance firms from abroad would be...

Value And Growth In A Portfolio

In an uncertain world, we need to be able to quantify the degree of uncertainty of our guesses. In standard financial theory, we use the variance or standard deviation of the returns. The variance measures how spread out the values are around the average or mean value. The larger the spread, the greater the risk is. The standard deviation, which is sometimes used in place of the variance, is simply the square root of the variance and is used because it is in the same units as the return. One...

Conclusion

China has opened the financial markets, mostly on schedule with the WTO commitments. Chinese authorities have also taken measures to strengthen the financial sector to ensure that it is able to support the continued economic growth. Beijing has set up AMCs to take NPLs off bank balance sheets. Many foreign financial institutions have acquired stakes in 17 domestic banks. Foreign entry in securities business has resulted in six joint-venture securities firms and 24 fund management companies by...

Types of Corruption

The root of corruption is either power or money. Corruption undermines protection of private property rights, deters potential investors, and drives entrepreneurial energy toward redistributive activities. Solutions to fight corruption include reducing opportunities for rent seeking through deregulation and simplifying procedures to reduce the discretion by officials. There are two different theories to corruption. One is based on the principle-agent theory. This approach assumes that there is...

WTO Commitments

China's WTO commitments include the tightening of rules on intellectual property, tariff concessions, and market access of non-Chinese service suppliers engaging in the distribution of pharmaceuticals. All such moves will create additional business opportunities for non-Chinese pharmaceutical companies in China and, in turn, place an intense pressure on the Chinese pharmaceutical industry. From a long-term point of view, China's accession to the WTO will help improve industry performance and...

Market Opening In Securities

Many investment banks see tremendous opportunities in China. Investment banking houses such as Goldman Sachs, Morgan Stanley, Citigroup, and UBS have all positioned themselves to take advantage of the market potentials. Access to China's market became a reality after China joined the WTO. Foreign securities houses now are able to establish joint-venture operations, become special members of all exchanges, and engage in underwriting A shares. In addition, they can engage in underwriting and...