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Wanna Buy Some Shares in Facebook?

By Zhu Xiyan (
News, cover
Issue No. 569
May 14, 2012
Translated by Zhu Na
Original article: [Chinese]

Li Yang (李洋) is a China-based investor who buys U.S. stocks but doesn’t know how to jump the Great Firewall – he’s not sure what to do for the $10 billion initial public offering of Facebook on May 18.

Last week, he got an email from a friend at Goldman Sachs, one of the Wall Street banks underwriting the offering, recommending that he buy some of the shares.

"This amount of financing is unimaginable," said Li, recalling his surprise when Google sold $1.9 billion of stock in August 2004.

Li has also been reading research from investment banks forecasting that market conditions will deteriorate in May.

The social networking website wants to sell 20 percent to 25 percent of the listed shares to small investors. That compares to a usual proportion of 15 percent.

Li could be one of those investors - for the moment he has told his friend at Goldman Sachs that he’s "thinking about it". Until now, he has focused on so-called China concept stocks, which banks market as a play on the country's growth, and he has a far poorer understanding of Facebook’s business.

He first heard about the company from Chinese who had lived abroad and assumed that it was a platform for young people chasing girls or looking for classmates.

The next time he came across the company was The Social Network, the film dramatizing Facebook’s rise, in which founder Mark Zuckerburg struck Li as smart, lucky and arrogant.

Li has a microblog in China but no Facebook account. Last year, he bought shares in Sina, whose platform he uses for his blog, and saw the price rise from $60 to $130, his most successful investment on the secondary market in 2011.

Li decided to ask the advice of a 29-year-old friend who reports on finance, Zhang Jie (张洁). She recently opened an account to trade U.S. stocks, bought two shares in Apple and earned $30 in a week.

"I’ll definitely buy Facebook’s shares. Didn’t you see that Americans are using them as graduation gifts?" she said.

As a tiny retail investor, she won’t be able to buy Facebook stock prior to the listing, but she said that she’ll buy some on the first day of trading as a kind of tribute to the company.

Li casts his mind back to the first day of trading in PetroChina when the share price surged to 48 yuan per share. It’s now trading around 9 yuan.

"If it becomes a mass event, it is hard to control.”

Thinking of the Facebook devotees who might bid up the price of its offering, Li has decided to watch from the sidelines.



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