A China Expert's Views On How To Invest In U.S. Listed China Based Companies

NEW YORK, Aug. 30 /PRNewswire/ -- The following is an article authored by Mr. Benjamin Wey, President of New York Global Group, Visiting Professor of Finance:

Due to China's explosive GDP growth of 9% per year for the last 30 years, some of the world's fastest growing companies are naturally based in China, many of which belong in the micro and small cap space due to their smaller sizes.

Over the past 16 years, our firm New York Global Group ("NYGG" www.nyggroup.com) has been advising China based corporate clients with their strategic growth. NYGG is a China and New York based corporate advisor with a large bilingual staff consisting of accounting and financial experts. Since NYGG established its Beijing office in 1998, the firm has efficiently executed more than 200 projects in China. NYGG staff speaks the Chinese language and knows the Chinese culture.

With access to significant investment capital, NYGG performs extensive due diligence on prospective clients. Despite a very large deal flow, less than 2% of all China based companies reviewed by NYGG have passed the firm's client review process. Several of those that have been rejected by NYGG still have found their way into the U.S. public markets through other sources. Almost all of the rejected companies have resulted in various problems for investors. In the ever-evolving China space, NYGG's local presence in China continuously provides the firm with the latest intelligence on Chinese companies. In addition, NYGG possesses in-depth knowledge regarding the background of nearly all U.S. stock exchange listed China based companies.

U.S. Listed China Based Companies Represent Less Than 3% of All Listings on the Reputable NASDAQ and the NYSE

Few people may realize that in the first half of 2010, over 190 Chinese companies became public on China's Shenzhen Stock Exchange after raising a total of US$30 billion in capital, the highest amount in the world for growth companies. Within the Shenzhen Stock Exchange is China's one year old NASDAQ-styled ChiNext Board, which serves high growth micro cap companies. The ChiNext has listed more than 100 new companies and these listings are currently trading at an average P/E multiple of 64 times ( on average, these listed companies reported 48% increase in net income for the first half of 2010.) Many of these small cap Chinese names on the ChiNext have successfully raised astonishing amounts of capital from Chinese investors -- often hundreds of millions of U.S. dollars each in highly oversubscribed offerings.

Meanwhile, the nearly 200 China based companies listed on the NYSE and the NASDAQ have demonstrated similar earnings growth patterns, however their shares are trading on average P/E multiple of only 7 times.