US listings by Chinese companies have increased despite trade frictions, as tech startups flee the mainland and Hong Kong markets, with the trend likely to continue.
Mainland Chinese companies raised $5.9 bn through IPOs this year through to August 17, more than the $3.8 bn raised in all of 2017, according to data from London-based financial markets analytical firm Dealogic.
This will be the biggest year for Chinese IPOs in the US since 2014, when Chinese e-commerce behemoth Alibaba made its New York debut. Offerings are growing in both size and number, with technology companies at the forefront.
Pinduoduo, China’s third-largest e-commerce company, raised $1.6 bn in its IPO last month – the fourth-largest US-only listing by a Chinese business, according to Dealogic. Its market capitalization exceeded $20 bn just three years after launching.
The trend looks set to continue. Electric-car maker NIO, which competes with Tesla in China, recently applied for a US IPO. Tencent’s music-streaming unit is also expected to debut in New York this year, and Chinese online car marketplace operator Cango opted to seek a New York IPO in July because of the maturity and liquidity of US stock markets.
‘We believe listing in the US will broaden our international horizon and enable us to benefit from international best practices in technology and business operations as well as corporate governance and investor relations,’ Cango CFO Yongyi Zhang said in a statement at the time of the IPO.
The fact that the tech-heavy Nasdaq composite index is in record-high territory is another factor drawing Chinese startups. By contrast, the Shanghai Composite Index and Hong Kong’s benchmark Hang Seng Index are languishing near year-to-date lows on the back of fears of an economic slowdown.
