Derek Pain: Foreign forces' invasion has its downside

No Pain No Gain

More than 50 Chinese companies enjoy a London share quote. Since the first arrived 15 years ago there has been a steady flow of newcomers with eight opting for full listings. Most of the others are on the junior Aim although a handful ventured onto the fringe Plus platform.

Although the new-issue business is down in the dumps, the Chinese invasion appears to be continuing. A number of aspiring groups have their sights on a London presence with a company called Fairy Fox, a clothing group, expected to join Aim this month. It hopes to raise £13 million from a placing but does not see London as its long-term home, indicating that Hong Kong could provide its main listing in a few years' time.

Hong Kong is also the main market for the first Chinese company to arrive in London, Datang International Power. It achieved fully listed status in March 1997 but its shares have experienced an extremely soporific time with most of the trading probably occurring in the Far East.

Globalisation has dramatically increased the foreign influence in London in the past decade or so. It is not only the Chinese that have come to town. Resources stocks from Russia and its former satellites have arrived in numbers and have become quite powerful, enjoying a not inconsiderable input when the Footsie, London's benchmark share index, is calculated.

I must confess I am uneasy about this foreign influx. My attitude is out of step with most investment participants. Overseas companies have for long been part and parcel of the London stock market scene but they have never been as numerous, or powerful, as they are now.

Indeed their influence in the Footsie calculations has produced suggestions that the widely quoted index should be revamped, or at least produced alongside a new index that reflects the performance of the UK economy rather than, say, a commentary on the future prices of metals and oil.

The Footsie was launched in 1984. In effect it replaced the FT 30 share index that was started in 1935 and composed of British companies. Banks were excluded from the original 30 shares selected, perhaps, displaying a considerable degree of foresight in view of the banking behaviour we have witnessed. It is unwise to believe an overseas company, although quoted in London, is restricted to the British rulebook.

It may have signed up to our listing requirements but it is still subject to the laws of its home country or, one it selects. I am also dubious about many of the so-called emerging markets, so beloved by many fund managers. Perhaps, in years ahead, some of these countries will turn out to be long-term winners. There could, however, be many upsets before any hoped-for success materialises.

Anthony Bolton, once the "golden boy" of City fund managers, has so far had to stomach sad reverses in China. Two years ago, he launched the Fidelity China Special Situations fund. The shares started at around 100p, topped 120p and are now 76p. Since its debut the fund has lost about a fifth of its value.

But Mr Bolton, a fund manager for 30 years, still expects it to prosper. He says: "To date the road has been hard but my enthusiasm for this amazing country remains unabated."

The Chinese companies that have sought a London presence have, as I suppose had to be expected, included some losers.

For example the Dongfang Shipbuilding Group arrived in August. The shares hovered near 20p for a time, yet by November had shot to 120p. But, as far as investors were concerned it was not all shipshape and Bristol fashion. By March the price had fallen below 20p after particularly discouraging trading statements. Then Northland Capital resigned as financial adviser and stockbroker to the company, prompting a share suspension. Last month the quote was cancelled.

And the excitement over rare earth elements, needed for some high-tech industries, has given another Chinese group a highly volatile ride. Since the shares of Rare Earths Global arrived at 247p in March they have topped 1,000p but are now down to 323p.

Still, the group, which is in the process of raising a $50 million loan through Credit Suisse, could well enjoy a prosperous future.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
footballLIVE City face Stoke, while Warnock returns to Palace dugout
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Arts and Entertainment
books
Life and Style
3D printed bump keys can access almost any lock
gadgets + techSoftware needs photo of lock and not much more
PROMOTED VIDEO
News
i100
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
i100
News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Law Costs

    Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

    Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

    £35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

    DevOps Engineer (Systems Administration, Linux, Shell, Bash)

    £50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

    Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

    £60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

    Day In a Page

    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference