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Chinese IPOs Skip U.S.

BEIJING -- Last week saw a head-turning IPO from an up-and-coming Chinese chain of language schools. New Oriental Education & Technology Group (EDU) saw shares zip upward by 39% Thursday in its first trading day on the New York Stock Exchange.

One reason, perhaps, for the firm's strong debut is that Chinese IPOs have lately been in short supply, despite American investors' healthy appetite for emerging-market growth stories. New Oriental was the first Chinese IPO to list on the NYSE this year. A second, device-maker Mindray Medical International, last week filed to sell up to $276 million in shares on the NYSE.

But New Oriental Education and Mindray are the exception. The rule among more mainland companies lately is to pass up American exchanges in favor of Hong Kong -- a worrying trend for the NYSE and Nasdaq, which have already missed out on several multibillion-dollar China IPOs this year.

Some Chinese firms looking to go public "really feel the Hong Kong market is just as prestigious and offers competitive liquidity," says Ran Wang, CEO of China eCapital, a Beijing-based investment bank.

Though its corporate governance standards are considered high, rules for the Hong Kong exchange aren't as strict as those in the U.S. under Sarbanes-Oxley. Also in its favor, Hong Kong feels culturally familiar to many mainland executives, and it's been considered a part of China politically since the British handover in 1997.

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