No fear of the bubble: More Chinese Internet firms rush for US IPO

With two Chinese Internet firms recently landing the New York Stock Exchange (NYSE) and with more expected to follow, the US capital market is likely to see an IPO boom of Chinese companies in May. Analysts, however, do not share the same optimism.

“American companies blew the dot-com bubble 10 years ago. Now it’s the Chinese companies,” said Zhang Chaoyang, chairman of Sohu.com, a major Chinese portal website also listed on the NYSE.

NetQin Mobile, a Chinese mobile Internet security software developer, filed for an IPO earlier this month after shares of Renren, one of the biggest social networking companies in China, surged 28.6 percent in its NYSE debut despite several red flags raised by industry analysts.

Xinhua News reports that in the coming weeks, China’s dating site Jiayuan.com and Phoenix New Media Limited, a subsidiary of the Hong Kong-based Phoenix Satellite Television, are expected to follow the recent US IPO filing trend, ignoring analysts’ suggestions that investors should be wary of bubbles.

Their worries were echoed by the plunge in the stock price of NetQin, dropping by 19% to $9.3 per share from its IPO price of $11.5, immediately after its debut.

Additionally, more Chinese companies have also shown intentions to go public on the NYSE this month including TaoMee, which runs a social-networking website for Chinese children, and Shenzhen Xunlei Network Technology, a video and music file-sharing company partly owned by Google.

Analysts say the successful debut of Youku.com, an online video website, and Dang Dang, a Chinese e-commerce company, on the NYSE last year might have encouraged more Chinese Internet companies to go public in the US.

It is undeniable that investors are blinded by China’s more than 270 million users of social networking websites with a market worth of more than $2 billion. It is said that the numbers are likely to double in two years, according to statistics with Analysts International, a leading consulting company on China’s Internet market, and this is simply too hard to ignore.

Deutsche Bank analyst Alan Hellawell, however, predicts that the scarcity of NYSE listed Chinese stocks will diminish as more Chinese Internet companies go public in the US, lowering IPO prices in the future.