Number of Chinese IPOs in US Hit Eight-Year High

Chinese IPOs

This year, the number of Chinese companies that filed for IPO in the United States reached a new high never before seen since 2010, according to Financial Times. Some 33 Chinese companies got listed on the New York Stock Exchange and Nasdaq in 2018, a great leap from 2017’s 17 listings.

Earnings from the newly listed companies topped $9 billion, but were still well below 2014’s $29 billion, which was largely boosted by the IPO of Internet giant Alibaba.

Some of the more notable offerings this year include iQiyi, an online video platform; NIO, an electric vehicle manufacturer; and Tencent Music, Tencent’s music streaming service subsidiary.

“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, manager 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.”

Despite the rising number of listings, these IPO stocks did not deliver a strong performance. On average, investors who bought at the offer price saw losses of about 16 percent.

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

Still, the competition for IPO deals from Chinese companies is heating up as the Hong Kong Stock Exchange altered standards to allow dual-class shares, and allowed biotech firms who aren’t running a profit yet to file for IPOs.

The Hong Kong Stock Exchange hosted 76 Chinese listings, and proceeds were about $31 billion. Listings in Chinese mainland plummeted from 411 in 2017 to 94 this year, and proceeds also dropped to $18 billion.

Featured photo credit to 视觉中国