UK advisers struggling with Chinese stock listings - survey

By Alasdair Pal and Patrick Graham

LONDON, May 23 (Reuters) - Almost two-thirds of the advisoryfirms who assist in stock exchange listings in London say theyare struggling to guide Chinese firms through the process, asurvey showed, in the latest sign of problems with such initialpublic offerings.

The survey by accounting firm Moore Stephens showed 64percent of advisers said they had faced difficulties incommunicating with Asia-Pacific and Chinese companies listing onthe small-cap Alternative Investor Market (AIM).

"China is a key market for AIM, but unfortunately theadviser-client relationship is often not functioning as smoothlyand successfully as it might," said Marty Lau, Head of CapitalMarkets at Moore Stephens.

Of the 40-odd China-based firms to list on AIM over the pastdecade, only a handful have seen their shares rise in value.

At a time when Beijing is steadily opening the way to moreinvestment flows into and out of China, at least 15 Chinesefirms on AIM have delisted and the majority have seen theirvalue fall by at least 50 percent compared with their initialvaluations.

The lack of confidence in the Chinese listings has added tobroader criticism of AIM, which one U.S. regulator has describedas a "casino" where 30 percent of issuers are gone in a year.

"Companies are very aware of the importance of goodcommunication with advisers, as well as investors andregulators, but from where advisers are standing, especially asregards China, the appropriate channels are not always clear,"Lau said.

Nominated advisers are responsible for helping firms listand providing broking services and research coverage.

Lau said that if companies opened offices in the UK andappointed UK-domiciled executive directors it might help restoreconfidence.

But investors in the market say the issues are broader.

"A lot of companies have had problems with corporategovernance, and it's unclear why the exchange doesn't doanything about it," said Colin McLean, Chief Executive of SVMAsset Management and an investor in the market.

He is an investor in Hutchison China Medtech, one ofthe few Chinese AIM stocks to have risen in price since itslaunch. Its shares are up nearly five-fold since listing. (Reporting by Alasdair Pal and Patrick Graham; Editing by HughLawson)