Business
UPDATED: 13:33, October 29, 2004
S&P keen on setting up rating firm in China
Standard & Poor's (S&P) is interested in launching its own rating company in China when regulators allow, a senior executive said yesterday.
"We would like to operate in the domestic market... if they (the authorities) are willing to offer the licence," said Paul Coughlin, Managing Director of Corporate & Government Ratings of S&P for the Asia Pacific region.
A top global rating service provider, S&P is eyeing business opportunities in the mainland, based on the strong economic growth and rising demand for international-standard rating services.
But Coughlin said no timeframe was clear for the issue of such a licence, which would enable the company to launch a wholly-owned or joint venture rating business here.
Right now, S&P's rating service regarding Chinese companies is being operated from Hong Kong. It has some analysts stationed in a representative office in Beijing.
As business grows, it is planned to increase staff, Coughlin said.
Large companies that have an international presence or overseas borrowing activities, as well as banks and securities houses, are its major target customers for rating.
As part of its preparation to expand its business in China, the company yesterday also released the "China Top 100 Corporates" report, which reviews financial trends for the top 100 listed corporations in China.
Earnings of 86 per cent of the companies covered in the report increased in 2003. And a number of large State-owned enterprises (SOEs), such as PetroChina, China Mobile and China Telecom, remain the most profitable ones.
The profitability of the Chinese companies has improved quite substantially and about half of them have sufficient cash flow, said Coughlin.
It means that the SOEs reforms and market reforms are paying dividends, he said, adding that more overseas investors are paying attention.
But the earnings should decline slightly in 2005 as commodity prices stabilize and loan restrictions on specific over-invested industries start to take effect.
This should come as no surprise because earnings have improved significantly during the past few years.
Domestic consumption and private investment will remain strong, said John Bailey, Director of Corporate & Infrastructure Ratings of S&P, a major contributor to the report.
China Daily
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