Chinese Companies Show Strong Interest in Listing on U.S. Stock Exchanges
Chinese companies have a strong desire to list on U.S. stock exchanges, but the process has become more complicated, according to Kobe Ge, the head of China at the New York Stock Exchange.
Speaking at HaberTusba’s East Tech West conference in Guangzhou, China, Ge stated that despite the challenges faced last year due to Covid-19 restrictions and regulatory uncertainty, many of these issues have been resolved, and there is still considerable interest from Chinese businesses to list in the U.S.
However, Chinese companies are not familiar with the procedures, which have become more challenging recently. Ge explained that previously, listing in the U.S. was relatively easy, taking around four-and-a-half to five months to complete an IPO. But now, due to new rules from the China Securities Regulatory Commission, companies may need to spend up to 12 months in preparation for a U.S. IPO.
The new measures, effective since March 31, require domestic companies seeking to list in the U.S. or Hong Kong to comply with national security measures and the personal data protection law before going public overseas.
Despite a slow U.S. IPO market, a few Chinese companies have managed to list this year, mostly smaller firms.
Rising political tensions between the U.S. and China have also created uncertainty for Chinese companies and investors. Ge mentioned that President Joe Biden’s executive order in August, aimed at regulating investments and expertise supporting China’s sensitive tech development, has added to the uncertainty.
Ge remained optimistic that Chinese listings in overseas markets will rebound as long as domestic firms focus on building strong businesses. He compared the situation to a ship at sea, emphasizing the importance of building a well-constructed ship that can withstand changing weather conditions.
Investors are now looking for mature business models and predictable profits, rather than just high growth, according to Ge. He believes that the overall U.S. IPO market will improve from April to October next year.
Robert H. McCooey, Jr., a vice chairman at Nasdaq, echoed this sentiment and highlighted a strong pipeline of Chinese companies intending to list on the exchange soon. He mentioned that there are currently 116 companies in the process or planning to file for listing, a significant increase from earlier this year.
As of January 2023, there were 252 Chinese companies listed on U.S. exchanges with a total market capitalization of $1.03 trillion, according to official data.