From: China Securities News by He Suchen
Compiler: Fund China

The trouble with private equity

Over the years, the Private equity investment fund industry militants in the open market storm and stress. They took the risk of invading the poor management of those companies, but also to multinational corporations stormed into the headquarters. The wind direction in the market for such a long time has supported them, so very difficult to imagine what they can to block the changes. Last week we witnessed the largest in its history Private equity transactions, Canada, a telecommunications operator was Private equity fund to 48.5 billion U.S. dollars, “gobbles up.”

Optimism may as Private equity funds are infinitely bright prospects for another example, but there are also likely to be a makeover. Private equity offensive to supply energy engines of debt financing has become difficult to start up. This may not happen this month or even this year may not have happened. But Private equity and prosperity will sooner or later end up.

This possibility will allow private placement of equity many critics are pleased, They often caused by the Private equity and the many injustices right’s allegations. For example, the Private equity deprived of the assets of the company and making a profit unscrupulous; Allow the companies to shoulder the risk of heavy debt, thus squeezing funds for investors; little attention to employees and suppliers; his greedy partner swap others to avoid paying the tax.

International Investment preferred India, China

In today’s worldwide market, American investors overseas investment is very easy. Whether through traditional mutual funds, index funds, the United States Depository Receipts listed in the United States of foreign stocks, or even through the online trading of the stock exchanges abroad can realize overseas investment. If the United States shares 13%, the long-term expected earnings growth of your investment style terms is not enough. And you are prepared to take additional risks (such as exchange rate movements and the political uncertainty), Then we can you recommend some other countries. Securities analysts say that these countries can provide better benefits expected.

Such as China, analysts unanimously predicted in the next three to five years, its annual revenue growth rate will reach 19%. This optimistic attitude as a reflection of (also a certain degree of irrational fanaticism), China’s Shanghai Composite Index (3914.395, -1.60, -0.04%) in the past 52 weeks grew by 183%. Of course, phenomenal growth also need to we pay the price.

In the world’s largest stock market, China is expected to profit in 2007 is the pricing of the highest price-earnings ratio to 26 times. Reflection of 4.6 times to rank second, with the highest economic overheating in the India : Reflection of 4.9 times. With the difference is that Japan, South Korea and China Taiwan Reflection of not more than two times. These three markets, the Taiwan region, the expected best : 2007 revenue growth expectations to 26%. 2007 estimated price-earnings ratio of 14 times.

American Enterprise dissatisfaction “Sarbanes Oxley Act“

In July 2002, President Bush issued in New York in a speech, Enron-oriented experience and WorldCom financial scandals of Wall Street, he promised to punish those who harm the interests of the people of the United States of crime, and announced a devastating blow to the “moral confusion and relativism,” and Description of the many proposals aimed at restoring investor confidence in the arrangements. If he had made in his own words, “so that financial companies out of the shadows of the strategy of” the three weeks, President signed the “Sarbanes Oxley Act.” However, this does not end the company’s financial scandal broke out, but the United States opened a corporate governance, auditing and reporting practices of a long and tortuous process of reform.

Five years later, such efforts are still continuing and I do not know when they can be settled. In fact, although many legislators, Securities experts and scholars are right, “Sarbanes Oxley Act” attitude with praise, But most of the company’s financial director, has actually much more pessimistic. “CFO” magazine joint Duke University Fuqua College of Business recently did a survey shows, fully three-quarters of the company’s financial director to believe that the Act should be reformed or abolished, almost the same number of people believe that the costs have exceeded the receipts. They voiced the frustration level is already higher than the previous survey results.

Copyright Fund China 2009.

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