More than two-thirds of Chinese groups listed in the U.S. this year have fallen below their initial public offering price, despite record levels of fundraising, as rising regulatory scrutiny has hit sentiment. investors.
The low share price performance comes after 34 Chinese companies raised $ 12.4 billion in New York in the first half of 2021, data from research provider Dealogic showed, a maximum of all the time. This compared to 18 listings that raised $ 2.8 billion in the same period last year.
The surge gave a record in the first half waterfall for Wall Street, with investment banks including Goldman Sachs and Morgan Stanley generating nearly $ 460 million in fees, according to Dealogic.
But about 70 percent of these Chinese companies are traded below their IPO price, in part because of the effect of regulatory wind growth from Beijing and Washington.
Those include RLX Technology, the largest e-cigarette manufacturer in China, which has raised $ 1.4 billion. of January. Its shares fell 71 percent after the country published draft regulations classifying e-cigarettes as tobacco products in March.
Didi Chuxing, the ride-hailing group that became the the largest Chinese enterprise to list in the United States this year after collecting $ 4.4 billion in New York last week, it was also hit by a regulatory scrutiny.
His actions he fell abruptly Friday after China’s cybersecurity regulator announced that Didi was under investigation. However, Didi’s stock is still above its IPO price.
The company has been the largest Chinese float in the United States since Jack Ma’s trading group, Alibaba, in 2014 raised $ 25 billion, despite Didi cutting its initial fundraising goal from a questionable 7 billion dollars.
“There are regulatory concerns for specific sectors and a widespread general regulatory concern, so to get a multimillion-dollar agreement now you need to make the price to attract long-term global investors,” said a Hong Kong-based fund manager who invested in Chinese shares in the United States.
The Full Truck Alliance, which provides similar services to Uber for China’s transportation industry, grossed $ 1.6 billion on the New York Stock Exchange last month, but its shares also fell below its IPO price.
Smaller Chinese businesses have also done badly. MissFresh, a Chinese food delivery app backed by internet group Tencent, traded 34 percent below its issue price after its release in June. DingDong backed by SoftBank has reduced its IPO target by more than 70 percent ahead of its listing. Its shares slowly closed their first day of trading, although they have already increased by about 20 percent.
Raj Ganguly, a partner at venture capital firm B Capital Group, which invests in the United States and China, said: “For many investors. . . They prefer to invest in US technology companies or only in the largest and largest Chinese technology companies. ”
Chinese companies are against repressions both in Beijing and in Washington.
The first goal of technological monopolies, which include ending Alibaba’s record $ 2.8 billion, hit the Chinese stocks listed in the United States. The Nasdaq Golden Dragon China index, which tracks Chinese technology stocks listed in New York, fell 8 percent, against a 13 percent increase in the Nasdaq Composite focused in the United States.
In the United States, Chinese companies risk of being fired if they do not comply with the audit disclosure requirements. While increased scrutiny has led to a series of secondary lists from such groups in Hong Kong, it has not weighed on the rush for American charts.
“The maximum record [in fundraising] they have much more to do with the appetite of Chinese issuers than American investors, ”said the head of prime services at a European bank in Hong Kong.
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