60 People, 60 Stories

The long path to success

(China Daily)
Updated: 2009-09-30 08:26

China's stock markets have come a long way.This is not only illustrated by the Shanghai Composite Index's rise to more than 6,000 points in 2007, but mainly by the interest level of the international investment community in recent years.

I started looking at Chinese companies in early 2001 when there may have only been 15 or so analysts attending company briefings. There are now more than 50 in most cases and more than 100 in many. Even Warren Buffett bought into China.

Obviously, international interest has risen as China has grown. In many ways, the Shanghai market reflects the developments in China. These changes are broad. In the past eight years, the Olympics were hosted, subways no longer use paper tickets and Sinopec and CNOOC have moved into new office buildings. Where there was a shipyard in my first visit to Shanghai's Pudong area more than 10 years ago, now stands office buildings.

Growth has been far more rapid than I anticipated. I remember being impressed with Huaneng Power in 2000, when the company's installed capacity was just under 8,900 MW. At that time, I knew that China was building up future multinational corporations and Huaneng would one day rival International Power plc in asset size. To see Huaneng now larger than International Power in eight years has far exceeded my expectations.

While domestic growth has driven China's companies in the past, the future holds more challenges as China looks beyond its shores. Ups and downs in the market are unavoidable.

The measure of success in the next decade of China's stock markets and its companies will be to integrate the greater sophistication and cultural ambiguities of the international markets as China opens and international investor scrutiny intensifies.

Lorraine Tan is vice-president and head of Asia research at Standard & Poor's equity research. The views expressed here are her own.