Traders work during the initial public offering of Chinese ride-hailing company Didi Global Inc on the floor of the New York Stock Exchange (NYSE) in New York City, the United States, June 30, 2021.
Brendan McDermid | Reuters
Kobe Ge, China chief at the New York Stock Exchange, said there is strong interest among Chinese companies in listing on U.S. exchanges, but these IPOs have become a more complicated process.
Despite the negative impact of Covid-19 restrictions and regulatory uncertainty in the US last year, many of these issues have now been resolved and “we are still seeing very strong interest from Chinese companies in listing in the US,” he said at the CNBC’s East Tech West conference in the Nansha district of Guangzhou, China, on Tuesday.
But they are not as familiar with the procedures, which have recently proven more sophisticated, he added. That’s according to a CNBC translation of his Mandarin-language remarks.
“It used to be that listing in the US was relatively easy,” Ge said, pointing out that Chinese companies would only need four and a half to five months to complete a US IPO.
“Given some new procedures, a company may need to spend more time, a 12-month preparation period,” he said, citing new rules from the China Securities Regulatory Commission.
The new measures, which came into force on March 31, establish a registration process for domestic companies wishing to go public in the United States or Hong Kong and require them to comply with national security measures and the Personal Protection Act Comply with data before going public abroad.
Amid a tepid U.S. IPO market, the few Chinese names that managed to go public this year were mostly smaller companies.
The increasing political tensions between Washington and Beijing have also led to uncertainty among Chinese companies and investors, said Ge.
US President Joe Biden signed an executive order in August regulating new US investments and expertise that support China’s development of sensitive technologies. The new measures, expected to be implemented next year, target investments in semiconductors and microelectronics, quantum computing and certain artificial intelligence capabilities.
“Of course, the details have not been released yet, everyone is watching and waiting, so it may cause investors to take a wait-and-see approach to these changes,” Ge said.
Strong IPO pipeline
Nevertheless, Ge remains optimistic that Chinese listings in overseas markets will rebound as long as domestic companies focus on building strong businesses.
He compared the situation to a ship at sea. “Of course, everyone needs to pay attention to the weather and at the same time pay more attention to whether the ship is well built,” he said.
That means investors today are looking for mature business models and predictable profits rather than just high growth, he said. “So you have to build a very good ship.”
The overall U.S. IPO market is also expected to improve in the April-October period next year, Ge said.
Nasdaq Vice Chairman Robert H. McCooey Jr. expressed a similar view, emphasizing that there is a strong pipeline of Chinese companies looking to list on the stock exchange soon.
“I think there are currently 116 that are on file or that we know will be filed soon,” he said in a separate session at CNBC’s East Tech West event.
“And the much more interesting aspect of this is now with CSRC’s new process… everyone in China, everyone around the world can see the companies that are in the process because of how the regulations have been implemented,” he added referred to the China Securities Regulatory Commission.
This is a significant increase over the 65 Chinese companies, McCooey emphasized in a previous CNBC interview in June.
As of January 2023, according to official data, there were 252 Chinese companies listed on US stock exchanges – including NYSE, Nasdaq and NYSE American – with a total market capitalization of $1.03 trillion.
“We are pleased that we have had some entries that have gone through the CSRC process… three or four should be approved in the near future,” he added. “I think this gives confidence to companies interested in listing outside of China.”
Source : www.cnbc.com