International

China Claims Most US IPOs Since 2010

Despite Trade War, Chinese has most IPOs in U.S. Since 2010

There have been 33 initial public offerings (IPOs) for Chinese companies listed on the New York Stock Exchange and Nasdaq this year, the most since 2010, when there was 39, according to reports.

The companies include iQiyi, a video platform company and Nio, an electric car maker, as well as Tencent Music Entertainment.

“The level of new issuance of Chinese companies in the US is unusual given the escalating trade tensions and weakness in the Chinese markets,” said Daniel Delany, managing director at CIBC Private Wealth Management. “That said, longer term, Chinese companies have benefited from US listings, with the validation of more institutional shareholders and higher valuations.”  

The high number of listings did not necessarily translate into strong performance, as investors saw losses of about 16 percent on those stocks.

“The US listings of Chinese companies have not performed well in 2018. The biggest single reason is, simply, the weakness in the Chinese markets,” Delany said. “Additionally, many of these stocks have limited free float and newer shareholders, both of which can exacerbate the selling pressure.”  

Chinese retail sales were the slowest in 15 years in November, and factory output was also down. This data exacerbates fears of a troubling outlook for the global economy, and concerns about the U.S.-China trade war and worldwide growth slowdown have sparked selling.

The U.S. has competition for Chinese stocks, as the Hong Kong stock exchange recently altered listings to permit dual-class shares, and let in biotech companies which aren’t yet profitable.

The idea of a shareholder structure that lets company founders keep control through super voting rights, even after a listing, is a popular one with tech companies.

The Hong Kong stock exchange hosted 76 Chinese listings, and proceeds were estimated at $31 billion, the most on that exchange since 2010.

Mainland Chinese listings dropped from 411 to 94 and proceeds fell to $18 billion, the flimsiest since 2014.

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