Funds raised by Chinese groups on the US stock market rose 440% in the first months of 2021, due to the attractiveness of the towering Wall Street valuations overcame the risk of forced sell-off.
According to data from Dealogic, Chinese companies have raised a record $ 11 billion this year on the New York Stock Exchange and Nasdaq through initial public offerings, stock sales. next ballot and convertible bond issue.
Major listings include the e-cigarette maker’s $ 1.4 billion IPO RLX technology and an offer of $ 947 million from the software company Tuya, along with 20 other Chinese groups.
The series of deals underscored the attractiveness of the vast US capital market to Chinese companies despite the stress between Washington and Beijing.
NYSE this year unlisted three China’s state-owned telecommunications companies over their suspected relationship with the country’s military. More people could meet the same fate after US lawmakers in December passed a law that would force delete group refusing to serve US auditing inspections for three years, which was banned by Beijing.
But IPO bankers and attorneys say US listing still allows Chinese groups to access the market more in-depth and is more covered by stock analysts, even as exchanges. Hong Kong and mainland China find ways to close the gap.
“Perform [of the delistings law] Jason Elder, a partner at the law firm Mayer Brown in Hong Kong, said. “Most companies wouldn’t want to sacrifice a few years of growth while they wait for that to disappear – especially with the constructive market environment we have right now in the US.”
The list boom also reflects China’s strong economic recovery after the Covid-19 pandemic.
Last week, China reported record annual GDP growth more than 18% in the first quarter, illustrating how Beijing’s decision to impose stringent door-lock measures a year ago helped it map a way out of the pandemic much earlier than its peers across the world. bridge.
“The Chinese economy is forecast to grow strongly by 2021. With that is the emergence of a group of very strong companies and of course, you have investors looking for,” said Craig Coben. how to invest in those names. co-head of global capital markets in Asia-Pacific for Bank of America.
While stocks are listed in Shanghai and Shenzhen there is a climax After beating the world in 2020, the US market has grown strongly this year, with the standard S&P 500 index up 10%.
The US market also benefits from price higher, with the price-to-income ratio of the S&P 500 standing at 32 times the 19 times that of mainland China’s CSI 300. The Nasdaq Golden Dragon Index of Chinese companies listed in the US is trading at an attractive PE ratio of around 100 times.
That has helped drive IPO valuations and provided a receptive environment for selling shares of listed Chinese companies.
“Investors are focusing on growth rates and profitability prospects here and now, and they will address regulatory changes or geopolitical events when and when they are,” Coben said. reality.”