Don’t Believe the Hype: Avoid Chineses Banks Stocks and IPOs

October 9, 2006 -

While I still like certain individual Chinese stocks, I don’t particularly like the banking industry in China. This week, there has been enormous hype surrounding the largest IPO in history planned on October 27^th by the Industrial and Commercial Bank of China, which plans to raise USD $22 billion. To gain some perspective on the size of this IPO, Mastercard’s May 25^th IPO, which raised USD $2.58 billion, was the largest IPO in the U.S. stock markets in two years. The mania surrounding Chinese IPO’s is evident. Though both the shares of China Construction Bank and China Commercial Bank skyrocketed by 45% and 25% respectively after their IPOs within the past year, this isn’t enough to attract me into these waters. Why? Read more …

1 comment October 9th, 2006