The China 100 Stock Index was created to help investors gauge the performance of U.S.
listed Chinese companies.
The majority of the stocks trade solely on the NYSE, NYSE AMEX, and NASDAQ or
in very rare instances on the OTCBB. However, the biggest companies based on market
capitalization also trade on more than one exchange.
To help differentiate between the numerous companies ChinaVesting has created
These companies are the largest based on market capitalization and reputation. They often trade on other stock exchanges such as the Hong Kong, Shanghai, or Shenzhen. These Chinese multinational companies represent their sectors from a macroeconomic perspective.
Like the Panda, which is the symbol that represents China, these companies can be considered the representative public companies for China.
Although ChinaVesting believes most of these stocks rarely fit into our criteria for being undervalued we feel it is important to include them in the ChinaVesting index. These companies will help provide important insight on what direction China is moving towards either in that particular industry or as a country.
The companies that make up the Chinese Multinationals are the following:
Tiger companies embody the "American Dream" for Chinese companies that make the long journey towards a U.S. public listing. The main reason that companies from China pursue U.S. public listings is to obtain financing to expand their businesses. One of the indirect upsides of a U.S. listing is that it legitimizes the company in their own country and in general.
To qualify as a Tiger Company the issuer must be on a senior exchange such as the NYSE, NYSE AMEX, or NASDAQ. From a market value standpoint most of them are categorized as either a Small or Mid Cap company. In addition, the Tiger must have raised a minimum of $5 million USD as a U.S. public company.
The goal of every Tiger company is to become a Panda company. Statistically speaking very few will make the transition. However, the Tiger companies that ChinaVesting has identified embody the characteristics that create the possibility.
Companies identified as Dragons are the rarest to locate. They are few and far between because they represent deeply undervalued Chinese companies trading on U.S. exchanges. There are many parameters ChinaVesting uses to decide what companies are eligible to be classified as a Dragon.
The most important being:
A Dragon company must possess a market value that is less than comparables. The most common metric ChinaVesting will use is price to earnings (P/E) and enterprise value to earnings (EV/E). The market value must be significantly less to the point where the market value of the public company is less than or equal to what the company is worth as a private company.
How do we know what the company is worth privately? ChinaVesting speaks to our numerous Chinese Private Equity Firm contacts to determine what the value of the company would be if they purchased the company outright.