The importance of China’s financial market is open to question, but its gigantic size is hard to neglect. Industrial and Commercial Bank of China (ICBC) issued the biggest initial public offering the world has ever seen by raising $19 billion last year. China Shenhua Energy Co. raised $8.9 billion last week in the biggest IPO this year worldwide.
Big deals have created big brokerage firms. Citic Securities, a 12-year-old Beijing brokerage firm, is now the fourth largest brokerage firms in the world, trailing only behind Goldman Sachs, Morgan Stanley and Merrill Lynch – star brokerage firms of Wall Street with an average history of a hundred years. Shanghai-based Haitong Securities ranks the eighth biggest worldwide.
A trend easy to discern is that Chinese mega deal-makers favor Chinese underwriters. China International Capital Corp (CICC) and China Galaxy Securities underwrote Shenhua Energy IPO. Three Chinese brokerage firms underwrote the second largest IPO in China – that of China Construction Bank. In the top ten equity offering deals this year, the majority underwriters are Chinese firms. Goldman Sachs, Lehman Brothers, HSBC and Citi each appeared on the list once, in a consortium.
In other types of financial intermediaries, China is more visible as well. China’s four national banks are among the world’s biggest banks. At current market price, ICBC is the world’s biggest bank by market capitalization, bigger than Citigroup.
China also boosts Asia’s biggest sovereign wealth fund – China Investment Corp. The fund started operation last Friday with $200 billion capital under management.
China Life – the country’s largest insurance company – is expected to outsize AIG, the world’s biggest insurance company. AIG’s market capitalization is $173 billion, while China Life is $162 billion.
The emergence of large Chinese financials is probably the single most important event during the past several years. It is changing the landscape of world finance. Moreover, these monstrous firms are growing at an extraordinary speed.
But veteran capitalists need not to worry yet. Although they are big and are getting bigger, it is uncertain that these Chinese firms’ impact will be felt outside of China any time soon.
